Federal Reserve Chairman Ben Bernanke on Thursday rejected the idea that low U.S. interest rates were helping to fuel speculation overseas and potentially inflating dangerous new asset bubbles.
Answering questions at his Senate Banking Committee confirmation hearing, Bernanke effectively said that if other countries were worried that was the case, it was their problem.
It's not the United States' responsibility to ensure that there are no misalignments on every economy in the world, Bernanke said. I think it needs to be understood that United States monetary policy is intended to address both financial and economic issues in the United States.
Earlier this month, a senior Chinese official charged that the Fed's pledge to keep U.S. rates low for an extended period, coupled with the weak U.S. dollar, were creating new systemic risk for the global economy.
Chinese banking regulator Liu Mingkang said in Beijing that there was a massive impact on asset prices in other countries stemming from a carry trade in the relatively cheap dollar.
It is boosting speculative investment in stock and property markets and will pose new, insurmountable risks to the global recovery and, particularly, to the recovery in emerging markets, Liu, chairman of the China Banking Regulatory Commission, said.
Bernanke said countries that are concerned about speculation have their own tools to address bubbles in their economy and shouldn't look to U.S. monetary authorities to do the job for them.
(Reporting by Glenn Somerville; Editing by Kenneth Barry)