Federal Reserve Chairman Ben Bernanke said today that central banks around the world should have a dual goal of controlling inflation and supporting the banking system - and that the Fed had acted successfully during the recent economic downturn.
Bernanke spoke today in Boston about the lasting impact of the "great recession" of the last few years.
The Fed Chairman told Congress earlier this month that the economy was "close to faltering." He said lawmakers need to act to reduce the deficit because the Fed's powers to stimulate the economy through monetary policy are limited.
Bernanke declined to offer specific suggestions as to how to cut the deficit, telling members of the Joint Economic Committee "I'm in favor of the law of arithmetic. I don't care — spending cuts, tax increases — as long as it adds up and as long as the policies themselves make sense."
According to the Associated Press, there is a sharp division at the Fed about how to help the economy. Some of the Fed's policy committee members want the central bank to take bolder steps to boost growth because the unemployment rate has been stuck at about 9% for more than two years. Other members say the Fed has done all it can and that further action could increase inflation.