House Financial Services Chairman Jeb Hensarling urged Yellen “to adopt a more transparent and rules-based monetary policy that aims for price stability and long-term growth.”
“Since 2008, the Federal Reserve has held interest rates near zero and quadrupled its balance sheet to $3.9 trillion,” the Texas Republican said. “It has, in many ways, served as an enabler to the Obama administration’s failed economic policy through an unprecedented campaign of monetary stimulus with three massive rounds of bond buying.”
The Federal Open Market Committee on Dec. 18 tapered monthly bond purchases to $75 billion from $85 billion, saying in a statement that “labor market conditions have shown further improvement.”
The committee, scheduled to meet Jan. 28-29, probably will cut its purchases in $10 billion increments over the next seven meetings before ending them in December, according to a Bloomberg News survey of economists after the FOMC announced the reduction.
The Fed says its bond-buying helped reduce unemployment to a five-year low of 7 percent in November. Bernanke backed the stimulus in a Jan. 3 speech, saying that “for the most part” academic research supports the conclusion that bond purchases and clearer communication from the Fed have “helped promote the recovery.”
Bernanke also said headwinds that have held back the economy may be abating, leaving the U.S. poised for faster growth.
“The combination of financial healing, greater balance in the housing market, less fiscal restraint, and, of course, continued monetary policy accommodation bodes well for U.S. economic growth in coming quarters,” he said in Philadelphia.
The Standard & Poor’s 500 Index climbed 30 percent last year for its biggest advance since 1997, while home prices rose in October from a year earlier by the most in more than seven years, according to the S&P/Case-Shiller index of values in 20 cities.
Yellen was among the first Obama nominees considered under Senate rules adopted in November that deny a single senator the right to demand a 60-vote threshold on candidates.