February 26, 2013
Ben Bernanke, chairman of the US Federal Reserve, defended the decision to launch a third round of QE by telling US politicians that the benefits still outweighed the risks.
He was speaking shortly after Sir Mervyn King, Governor of the Bank of England, told an audience in Japan that monetary policy was “not a panacea” for economic problems and repeated his warning that, “as time passes, larger and larger doses of stimulus are required”.
Mr Bernanke said policymakers were aware of the risks from QE3, which was launched at the end of last year, including potential problems with unwinding the programme and rising inflation, but he claimed they were not material at the moment. “To this point, we do not see the potential costs of the increased risk-taking in some financial markets as outweighing the benefits of promoting a stronger economic recovery and more rapid job creation,” he told the Senate Banking Committee.