Federal Reserve Chairman Ben Bernanke told Senators today that not raising the debt ceiling would cause the deficit to rise, an "ironic" outcome given the nature of the debate over the budget between the White House and Congress.
Testifying before the Finance Committee he said letting the U.S. default on its obligations would cause a "self-inflicted wound" to the domestic and world economy.
Speaking to House lawmakers yesterday, Federal Reserve Chairman Ben Bernanke warned that if Congress does not raise the debt ceiling the result could be similar to the economic crisis experienced at the end of 2008 into 2009.
Mr. Bernanke also discussed steps the Fed could take in response to continued slow economic growth. As he did during yesterday's House Financial Services hearing, he said that spending cuts in a deficit reduction deal should be structured so that they do not hurt the economy in the short term.
Presenting the semi-annual Monetary Policy Report provides an opportunity for the Fed to update its view on the economic outlook directly to Congress.