Fed Policy 'Too Loose For Too Long': Rep. Ryan
The U.S. is "limping out of this recession" at growth of 1.7 percent thanks to Federal Reserve policy that has been "too loose for too long," Rep. Paul Ryan, R.-Wis., chairman of the House Budget Committee, told CNBC.
"The [Congressional Budget Office] is projecting slow growth. The Fed was way off on its growth projections. It is now revising its projections," he said Thursday, hours after grilling Federal Reserve Chairman Ben Bernanke during his appearance before the Budget Committee.
"I'm glad that he's adding more transparency to the Fed by putting this policy statement out," Ryan said. "The content of the statement I have some real questions about."
He said he believes from the statement's "ambiguous" language that the Fed will put up with deviations in its inflation target if it will get the unemploymentrate down.
"The ambiguity in that statement tells me that they're leaning more to the dove side and away from the hawk side and that we could have some inflation" beyond its stated target, Ryan said. "Once the cow is out of the barn, it's out. I question the Fed's ability to mop it up after that moment has arrived."
He said the policy has been "too loose" since 2003. Bernanke does not acknowledge that the Fed's easy money policy "gave rise to the asset bubble that gave us the housing meltdown," Ryan claimed. "So if they don't think they made a mistake then, then what's to stop them from repeating it again?"
Although Ryan said low interest rates hurt those on fixed incomes, he agrees with "some of the dissenters" in recent Fed policy statements that there should be some sort of "accommodative monetary policy."
