Federal Reserve Chairman Ben Bernanke continued on Friday to defend his groups decision to buy bonds in an attempt to create financial stability inside US markets.
According to Bernanke his groups two rounds of bond purchases and mortgage-backed securities were needed and “generally successful” in lowering interest rates.
Bernanke was speaking to a group at George Washington University on Thursday when he revealed that the:
“Lower long-term rates have, in my view and in terms of the analysis we do at the Fed, promoted growth and recovery,” although he admitted that the housing market was “weaker than we would have hoped.”
Ben Bernanke also talked about the effect of asset purchases known as “quantitative easing” noting that the Federal Reserve didn’t “print money” to purchase the assets but instead relied on crediting banks with funds electronically.
Bernanke notes of his groups decision:
“We’ve been quite successful in keeping inflation low.”
Bernanke also revealed that the Feds bond buying programs has earned money for the U.S. taxpayer, helping to reduce the federal budget deficit.
The Federal Reserve has attempted to buy assets that they believe will be easy to sell off in the future.
In the meantime Bernanke noted that the central banking system has begun to rethink financial security, noting that after World War II:
“Many central banks began to view financial stability as kind of a junior partner to monetary policy—it was not as important. It’s now clear that maintaining financial stability is just as important a responsibility as monetary and economic stability, and indeed this is very much a return to where the Fed came from in the beginning.”
While Bernanke defended his own groups decision in helping the economy he also noted that new rules passed by Congress should help eliminate some financial risks in the future, specifically the Dodd-Frank financial overhaul law which gives regulators huge sweeping controls over the financial industry.