Federal Reserve Chairman Ben Bernanke doesn’t care about Capitol Hill or campaign-trail bullies. He has said repeatedly as the central bank has come under a political magnifying glass this year: The Fed bases its decisions on economics, not politics. On Thursday, the Fed chairman backed up that assertion with action.
The central bank acted boldly this week–about as boldly as it could have, kicking off an open-ended round of bond-buying, extending its commitment to keep short-term interest rates low, and pledging to do even more if the labor market doesn’t improve “substantially.”
The Fed has two goals, full employment and low inflation. Right now inflation in under control, employment is not. Had the GOP done something to improve the employment situation rather than try to make political hay out of it, we might not need the easing.
As it stands, it seems evident someone needs to do something. With the GOP blocking everything else, this is about the only rational way to make some progress.