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Under Attack, N.Y. Fed President Defends Buying of Bonds

By SEWELL CHAN

With the Federal Reserve under attack at home and abroad, it is making an unusual public bid to keep itself away from the political crossfire.

After a barrage of criticism over the last week — including from foreign leaders, Congressional officials, economists and Alan Greenspan, the former Fed chairman — the Fed came out to explain its efforts to inject $600 billion more into the sagging economy.

One worry of Fed watchers as well as its defenders is that some of the domestic criticism may have the subtext of challenging the Fed’s traditional independence in deciding monetary policy without political interference.

In a rare on-the-record interview, William C. Dudley, president of the Federal Reserve Bank of New York, said that the Fed’s move was not intended to affect the value of the dollar, but rather to encourage a faster, stronger recovery that will also assist international growth.

“We have no goal in terms of pushing the dollar up or down,” Mr. Dudley said. “Our goal is to ease financial conditions and to stimulate a stronger economic expansion and more rapid employment growth.”

And in an interview with The Wall Street Journal, the Fed’s new vice chairwoman, Janet L. Yellen, defended the decision in broadly similar terms. “I’m having a hard time seeing where really robust growth can come from,” she said. “And I see inflation lingering around current levels for a long time.” Ms. Yellen said she was “not happy to see us caught up in a political debate."

http://www.nytimes.com/2010/11/16/business/economy/16fed.htm...