GOP Tells Fed to Stop the Stimulus

GOP to Fed: No more monetary stimulus

By Pete Kasperowicz - The Hill

House and Senate Republican leaders on Monday called on Federal Reserve Board Chairman Ben Bernanke to avoid taking any new monetary stimulus measures, and said there has so far been little evidence that monetary stimulus has worked.

"We have serious concerns that further intervention by the Federal Reserve could exacerbate current problems or further harm the U.S. economy," the four leaders wrote. "Such steps may erode the already weakened U.S. dollar or promote more borrowing by overleveraged consumers."

The letter was signed by House Speaker John Boehner (R-Ohio), House Majority Leader Eric Cantor (R-Va.), Senate Minority Leader Mitch McConnell (R-Ky.) and Senate Minority Whip Jon Kyl (R-Ariz.).

"Respectfully, we submit that the board should resist further extraordinary intervention in the U.S. economy, particularly without a clear articulation of the goals of such a policy, direction for success, ample data proving a case for economic action and quantifiable benefits to the American people," they wrote. "It is not clear that the recent round of quantitative easing undertaken by the Federal Reserve has facilitated economic growth or reduced the unemployment rate."

The letter was sent just as many Republicans are calling for the Federal Reserve to be reined in, and as one early leader in the Republican presidential primary -- Rep. Ron Paul (R-Texas) -- has increased his criticism of the Fed.

It also comes just as the Federal Reserve Board of Governors plans to meet this week to consider what steps it should take to meet its dual mandate of low inflation and steady employment. Because interest rates are already essentially at zero, and the Fed has already said it would keep them there until at least 2013, many economists say there is little else the Fed can do to try to help stimulate borrowing, lending and growth.

Direct congressional pressure on the Fed to make certain decisions is rare, but again, it comes under increasing pressure from some, like Paul, to have Congress take back its authority and/or possibly set up a new mechanism for conducting monetary policy.