Bernanke may find your options to reduce unemployment near a 26-year limited

Federal Reserve chairman, Ben S. Bernanke may find your options to reduce unemployment near a 26-year limited after seizing control from Republicans in the House of Representatives next month.

Representative Ron Paul of Texas, who has called for the abolition of the Federal Reserve, will head the committee overseeing. Representative Darrell Issa of California, who chaired the House Oversight and Government Reform, has said he wants the central bank to be more accountable to the public.

The Republicans are gaining weight in the months before the Fed policy makers are expanding weight if $ 600 billion asset purchase to boost the economy - a program that has sparked the toughest political reaction in three decades. Fed officials are likely to make any changes to the stimulus when they meet today in Washington last year, according to 38 of 39 analysts in a survey of 7-8 December.

"They are clearly not immune to politics," said former research director at the Atlanta Fed, Robert Eisenbeis, chief monetary economist at Cumberland Advisors Inc. in Sarasota, Florida. The political pressure will "absolutely" make it more difficult for the Fed to ease further.

"When you're locked up and have found in a hole, stop digging," he said.

In March or April, the central bankers will move to a conclusion on the effectiveness of its policy has been and will consider expanding your encouragement. Bernanke, in an interview broadcast on 05 December, told CBS Corp. s' "60 Minutes" that recovery can not be self-sustaining and further purchases of debt beyond the $ 600 million approved by the Fed through June are "certainly possible."

Interior skeptics

Congressional criticism reinforces the inside of the skeptics, including Dallas, Richard Fisher, president of the Fed and Charles Plosser of Philadelphia next month to win votes in the policymaking Federal Open Market Committee, said Vincent Reinhart, a resident scholar at the American Enterprise Institute in Washington.

"Politics is important," Reinhart, who led the Fed's Monetary Affairs Division from 2001 to 2007, said in a telephone interview. "There is no external criticism and does not empower the internal opposition."

Michelle Smith, a spokeswoman for the Federal Reserve in Washington, declined comment.

Republican lawmakers have proposed stripping the Fed of its mandate to maximize employment, so that would focus solely on inflation. Issa intends to consider whether the delay of five years for the release of minutes of meeting of the Fed should be shortened, and Paul said in an interview on Television last week that while it will not "right on front "push to end the Fed" obviously that is the implication. "

Consideration of communications

Responding to criticism, Bernanke, 57, launched the most comprehensive review of communications from the Fed in three years, the appointment of Vice President, Janet Yellen, the head of a subcommittee to ensure that the public is "well informed on matters of monetary policy, "according to minutes of November, the FOMC meeting.

In a meeting with Issa on December 9, Bernanke pledged to "work cooperatively" to make the Fed more transparent to the public, said Kurt Bardella, a spokesman for Issa.

The pressure to reduce monetary stimulus has already assembled the Republicans in the midterm elections last month won control of the House. John Boehner, of Ohio, the future chairman of the House, Republicans and three other senior Congress expressed its "deep concern" about asset purchases, also known as quantitative easing, on November 17 letter to Bernanke. The program can create bubbles in asset prices and weaken the dollar, they said.

Treasury yields

Until now, quantitative easing has given mixed signals meeting the goals of reducing interest rates and stimulate growth. Since the announcement of the program on November 3, the yield on the benchmark 10-year Treasury has risen to 3.28 percent from 2.57 percent.

"It's a strategy to fight against itself," said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. "The point of doing so was to lower rates, and if you do something that is seen as helping the economy or rising inflation expectations, which, presumably, would logically be pushing rates higher in the margin."

Inflation expectations for the next five years, as measured by the rate of equilibrium between nominal bonds and inflation index, rose to 1.61 percent yesterday from 1.44 percent on Nov. 3. IntercontinentalExchange Inc. 's dollar index, which measures the performance of the greenback against six trading partners, has risen 3.7 percent, confounding critics who said that the purchases of assets could weaken the currency.

Price increase

Paul expressed concern last week that the central bank will not be able to avoid an acceleration of inflation. He also said he plans to "push to discuss" whether the Fed should focus exclusively on policies that promote price stability.

The Federal Reserve, created by Congress in 1913, operates as an independent, non-partisan. The political reaction is "very problematic" because it damages confidence in monetary policy and injects concerns Congress to impose "restrictions crazy" in the central bank, said Mark Gertler, an economics professor at the University of New York.

Goldman Sachs Group Inc. economists led by Jan Hatzius said in a report of 19 November that the Fed was unlikely to complete prior estimate of the firm based in New York is $ 2 billion in asset purchases in part because policy "reaction is likely to increase the barrier for additional purchases."

Replicas of the worst recession since the Great Depression, including a stagnant unemployment rate by 9.4 percent or more since May 2009, has intensified the hostility toward the Fed, said Gertler, who has done research with Bernanke on how Financial crisis may worsen the crisis.

'Party politics'

"What's different now is the time that the economic crisis has been prolonged, and that makes it difficult for anyone to operate above the partisan politics," said Gertler.

Most Americans are not satisfied with the U.S. central bank, saying the Fed must be under strict political control or outright eliminate, according to a survey conducted National 4 to 7 December.

An agreement to extend the Bush tax cuts-was for two years may take a little pressure on the Fed to increase the stimulus to boost economic growth. The agreement of 858 billion U.S. dollars between President Barack Obama and Republican legislators, would also reduce payroll taxes and extend unemployment benefits next year, progress was made in the Senate yesterday.

Retail sales

Some signs suggest that economic recovery is sustainable, questioning the need for the Federal Reserve to expand its balance sheet. Retail sales probably rose for the fifth consecutive month in November, the Americans began their holiday shopping, according to a survey ahead of Commerce Department figures today. Other reports may show industrial production and housing construction rebounded, while the cost of living was stable.

The U.S. retail sales rose in October by the most since March. Minneapolis-based Target Corp., the U.S. discount retail second, an increase of 23 percent in third quarter earnings.