2012-03-28

WASHINGTON, March 27 (Xinhua) -- U.S. Federal Reserve Chairman Ben Bernanke on Tuesday used the classroom platform to defend the Fed' s ultra-loose monetary policy, saying the central bank's bold policy action has averted a worse economic recession.

Bernanke cited the Great Depression in the 1930s as a cautionary tale for monetary policies, saying the U.S. central bank did not do enough then to contain the crisis and shore up the economy.

One important lesson from the Great Depression was that the central bank should use accommodative monetary policy to avoid a deep recession, the economics professor turned Fed chief told George Washington University undergraduates during the third of four lectures that he is delivering this month.

The lectures were not policy speeches, but offered insight into the Fed chairman's mindset on how to formulate the monetary policy. It was the Fed's latest effort to enhance its transparency of the decision-making process.

Bernanke said the Fed has taken decisive action to inject liquidity into the markets during the financial crisis, and "the forceful policy response to the recent financial crisis and recession likely averted much worse outcomes".

Since the onset of the financial crisis, the U.S. central bank has rolled out two rounds of bond-buying programs, known as quantitative easing (QE), to lower long-term interest rates and boost consumption, and has kept the key interest rates at historical low levels. These ultra-loose monetary policies have attracted criticism at home and abroad.

Editor: Mu Xuequan

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