With Congress in gridlock, the Federal Reserve is the only hope for additional economic stimulus during this election year, Sen. Charles Schumer (D-NY) told Ben Bernanke during his semiannual monetary policy testimony.
“Given the political realities, particularly in this election year, I’m afraid the Fed’s the only game in town,” Schumer said. “I would urge you to take whatever actions you think would be most helpful in supporting a stronger economic recovery.“
Schumer said under current conditions, fiscal stimulus should be our first choice since it would be more effective than monetary stimulus, but added: “The bottom line is very simple, we’re not going to get the fiscal relief we want at least over the next short while. Perhaps after November we will.” (Related: Going Over the 'Fiscal Cliff' Could Cause Recession).
Bernanke told Schumer the Fed was prepared to take further action.
"The complication of course is we are dealing with less conventional tools," he said, "and we have to make assessments about their efficacy and the costs and risks may be associated with them."
He added, "It's very important we see sustained improvement in the labor market and avoid deflation risk."
Still, Schumer essentially pleaded with Bernanke to do something about the economy, pressing him on his outlook for inflation, the job market and whether the Fed still had other tools in the toolkit.
"So get to work, Mister Chairman," Schumer said.