Fed chief rejects harsh criticism from Germany

Agence France-Presse

"I respectfully disagree with her views," Bernanke told a congressional panel when asked about Merkel's comments Tuesday. "The U.S. and global economies, including Germany, have faced an extraordinary combination of a financial crisis ... unlike any seen since the Great Depression, plus a very serious downturn," he said. "And in that context, I think strong action on both the fiscal and monetary sides is justified to try to avoid an even more severe outcome."

Merkel issued a rare criticism of central banks Tuesday for their massive cash injections to boost the economy and stressed the importance of central bank independence. "We must return to a policy of having independent central banks," Merkel said in a Berlin speech.

German leaders normally respect such independence by not commenting in public on central bank affairs, making Merkel's remarks highly unusual.

Skeptic look

Merkel expressed "great skepticism regarding the power" of the U.S. Federal Reserve and the Bank of England, urging them to "put an end" to controversial, non-conventional measures aimed at boosting their recession-hit economies.

Bernanke, appearing in a hearing in Washington, said he was "comfortable with the policy actions that the Federal Reserve has taken" and that the Fed "can exit from those policies at the appropriate time without inflationary consequences."