Bernanke pushes past dissent

Bernanke last month pushed ahead with a plan to keep short-term interest rates near zero through mid-2013 despite three dissenting votes on the Fed’s policy-making committee. For decades, the Fed’s culture, and sometimes its strong-willed chiefs, have normally capped dissents at two.

Alan Blinder, former Fed vice chairman and a Princeton economist, suggests that Bernanke’s willingness to accept three dissents last month has “broken the ice’’: Bernanke won’t let resistance from several members stop him from pushing through bold moves that he and a Fed majority consider necessary.

It’s one reason many economists expect the central bank to announce something new after its policy meeting this week to try to jolt the sputtering economy.

Eventually, some economists expect the Fed to try for the third time to stimulate growth through a program to buy Treasurys to lower long-term interest rates. That’s a step known as “quantitative easing.’’

Whatever step he proposes, Bernanke would surely prefer unanimous support, to avoid sending any mixed messages to financial markets. But the chairman, an even-tempered academic, doesn’t shrink from debate.

“My attitude has always been if two people always agree, one of them is redundant,’’ Bernanke said after a speech this month in Minneapolis. “I have always tried to encourage debate and discussion.’’

He hasn’t been disappointed. Bernanke hears plenty from dissenting committee members who worry that his efforts to energize growth and job creation with super-low interest rates are hurting savers and could ignite inflation.

Fed officials say the central bank remains collegial despite the dissension. They contrast Bernanke’s Fed with the leadership of former chairmen like Arthur Burns and Paul Volcker, who were known for imposing their will on colleagues.

“Sometimes we have different opinions, but it’s all very congenial and very professional,’’ one of the dissenters, Charles Plosser, president of the Federal Reserve Bank of Philadelphia, told The Wall Street Journal this month. “It’s not a vote of no confidence in Bernanke . . . This is about how difficult decision-making is right now.’’

Bernanke has already taken extraordinary steps to boost the economy and stabilize the financial system. During the 2007-2009 financial panic, the Fed made emergency loans to banks. Since December 2008, the Fed has kept short-term interest rates near zero. And it’s conducted two rounds of quantitative easing to try to lower long-term rates.

Yet the Fed is expected this week to signal further action. Most economists expect it to reshuffle its $1.7 trillion portfolio of bonds and mortgage securities, replacing short-term investments with long-term bonds. That would be designed to further reduce long-term interest rates.

Or it could reduce or eliminate the 0.25 percent interest it pays on reserves that commercial banks keep with the Fed.