Congressional Republicans don’t like the idea of lowering interest rates.
They claim that if the Federal Reserve takes steps to boost the economy by shifting money from short-term securities to long-term holdings — a move that would almost certainly lower rates on mortgages and consumer and business loans — it would increase the risk of inflation.
So four high-ranking Republicans sent Fed Chairman a letter this week telling him to scrap the plan.
But Bernanke, who doesn’t really answer to Congress, is expected to move ahead Wednesday with plans to unveil “Operation Twist,” a plan based on actions taken a half-century ago when the Fed fiddled with long-term rates.
Bernanke’s plan would shift money out of the Fed’s $1.7 trillion portfolio out of short-term certificates.