March 25 - Federal Reserve Chairman Ben Bernanke defended the central bank's easy monetary policy- saying it’s also a boost for other countries, while New York Fed President William Dudley says not time yet to talk of exit. Bobbi Rebell reports.
Everyone wins. That was the message from Federal Reserve Chairman Ben Bernanke to a group of academics in London. His point: the central bank's aggressive easing of monetary policy - whose primary purpose was boosting the U.S. economy- is helping other countries around the world. While he did not actually use the term "currency wars" Bernanke made it clear that what benefits the U.S. spills over to its trading partners- even if the actions potentially hurt the currencies of emerging markets. SOUNDBITE: BEN BERNANKE, CHAIRMAN, U.S. FEDERAL RESERVE (ENGLISH) SAYING: "Because stronger growth in each economy confers beneficial spillovers to trading partners, these policies are not "beggar-thy-neighbor" but rather are positive sum, "enrich-thy-neighbor actions." In a separate speech, New York Federal Reserve President Bill Dudley confirmed there are signs the economy is improving- but called out the Federal government for its dysfunction and severe fiscal policies- saying the impact of those policies is the greatest danger in the next 3-6 months. SOUNDBITE: BILL DUDLEY, PRESIDENT, NEW YORK FEDERAL RESERVE (ENGLISH) SAYING: "We've already heard reports of the sequester starting to affect, for example research grant hiring is one example, repair of naval ships being postponed. So all these things in terms of the sequester are going to start of gradually showing up over the next 3-6 months. So if we can come through that in good shape then I will definitely become more optimistic about the outlook." He also made it clear that while there are risks to accommodative monetary policy- hitting the brakes prematurely would be a big mistake: SOUNDBITE: BILL DUDLEY, PRESIDENT, NEW YORK FEDERAL RESERVE (ENGLISH) SAYING: "Unfortunately we've seen this movie before. When this happened in 2011 and 2012 unemployment growth subsequently slowed. Because growth this year will be constrained by fiscal consolidation, there is a risk that this could happen again this year. As a result, it's premature to conclude that we will soon see substantial improvement in the labor market outlook." Dudley added that the Fed's bond-buying program is actually working better than he had hoped, and that while it may lose money- the Fed's mandate is to improve the economy- not to make money for the Treasury.