Below are highlights from the question and answer session of Federal Reserve Chairman Ben Bernanke's testimony on Thursday on the state of the U.S. economy to the House Budget Committee.
On the Dual Mandate Working Fine:
"I think...the dual mandate has worked fine..we have as good an inflation record as any other central bank. I don't think it's been a major problem. So I think it's served us well. That being said, Congress created the Fed, Congress gave us our mandate. If you determine that you want to change it, we will of course do whatever you assign us to do."
On More Aggressive Deficit Strategies:
"I want to be very clear, I don't want anyone to interpret me as saying anything other than that this Congress has a very difficult and important job to address the long-term fiscal sustainability of our federal budget. That's a critical thing. I think that even more aggressive strategies than have been pursued recently are warranted over the longer term but I also think that that could be done in a way which is persuasive to markets and achieves those objectives but doesn't quite jolt the recovery -- doesn't do it all at once. I think that as long as there's a credible, strong plan over time..and we move into that plan that we'll achieve most of the objectives of fiscal sustainability but we need to at least avoid doing harm. I would say do no harm is an important piece of advice that I would offer you."
On Dollar As a "Safe Haven":
"Our policies are hardly unusual. At this point almost every industrial central bank, excluding Canada which had less of a recession than we did, has a large balance sheet and low interest rates, including the ones with single mandates."
"I think the basic reason for low long-term rates, which are also a feature of every other industrial economy, are low inflation, slow expected growth and the fact that the dollar is a safe haven. And with problems in the world, people are investing in U.S. Treasuries because they're attractive."
On Controlling Inflation:
"We're always trying to bring inflation back to the target. The only sense in which there's a balance, of course, is that in looking at the two sides of the mandate the rate of speed, the aggressiveness, may depend to some extent on the balance between the two objectives. But we're always trying to return both objectives back to their mandate. We are not seeking higher inflation, we do not want higher inflation and we're not tolerating higher inflation."
On Inflation Being Under Control:
"The two sides of the mandate are generally complementary, we agree that low stable inflation is good for the economy, it's good for growth. Inflation currently, it looks to be very well controlled, our expectation is that inflation will be below target for the next couple of years. Of course unanticipated events can happen. The dollar has been pretty stable."