Fed Must Abandon $600 Billion Stimulus: Economists

A group of Republican-leaning economists will launch a campaign this week calling on U.S. Federal Reserve Chairman Ben Bernanke to drop his plan to buy $600 billion more in Treasury bonds, the Wall Street Journal reported on Monday.

Getty Images Ben Bernanke has faced criticism from Republicans that the Fed's plan will do more harm than good.

The Fed's latest policy decision has come under unusually heavy criticism from Republican lawmakers, and the central bank is likely to face intense scrutiny when a new Congress is seated in January.

"The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment,'' the WSJ quoted the economists as saying in a letter to be published as a full-page advertisement this week.

The 10-year Treasury yield hit a two-month high, helping the dollar hit a six-week high against a basket of currencies, partly in response to the WSJ report.

The letter was signed by economists including Stanford University's Michael Boskin, once chairman of former President George W. Bush's Council of Economic Advisers, and John Taylor, a monetary policy scholar who served in both Bush administrations.

Currently, the Fed appears on track to buy the entire $600 billion in U.S. government debt, barring any big unexpected shift in the economy's prospects.

If anything, lingering weakness and renewed concerns about global credit markets may lead top officials to lean toward doing more rather than less.

The independent Fed has already fought off a legislative effort that would have subjected its monetary policy decisions to congressional audits, although that proposal could resurface in the coming year.