Policy: Economy

Ben Bernanke warns of austerity as economy improves, Barbara Boxer says

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Economy,Federal Reserve,Ben Bernanke,Bloomberg News,Barbara Boxer

Federal Reserve Chairman Ben Bernanke voiced optimism in a meeting with Democratic senators about the outlook for economic growth while warning of the drag from fiscal austerity, according to a lawmaker at the gathering.

“He gave the state of the economy and it was very optimistic,” said Sen. Barbara Boxer of California after the closed-door Capitol Hill meeting with Democrats. “He feels it's very important not to have austerity.”

Bernanke said Jan. 3 the headwinds that have held back the economy may be abating, leaving the country poised for faster growth. Policymakers, citing improvements in the economy, last month trimmed the Fed’s monthly bond buying to $75 billion from $85 billion, taking a first step toward unwinding unprecedented stimulus engineered by Bernanke.

“The combination of financial healing, greater balance in the housing market, less fiscal restraint, and, of course, continued monetary policy accommodation bodes well for U.S. economic growth in coming quarters,” Bernanke said in a speech in Philadelphia.

The Senate voted 56-26 this month to confirm Fed Vice Chairman Janet Yellen as Bernanke's successor. The lunch meeting probably will be Bernanke's final face-to-face session with a group of senators before his second term expires Jan. 31.

“The overall tone of his message was a positive one,” said Sen. Tom Carper, a Democrat from Delaware. The Fed chairman said “the improving energy position that we find our nation in, the strengthening of our financial institutions, the modest reduction in our deficits, are all positives,” Carper said.

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