Opening Statements of Committee Members

Opening Statement of Senator Jim Bunning (R-KY)

Hearing on the Federal Reserve's Report on Monetary Policy
10:00 a.m., Thursday, July 20, 2000

Mr. Chairman, I would like to thank the Chairman of the Federal Reserve for testifying today.

I am very interested in hearing the Chairman's bi-annual comments on monetary policy. As the Chairman knows, productivity has continued to grow, quarter after quarter. Much of this can be attributed to the information revolution. I believe that these continuing productivity increases have effectively mitigated the potential inflationary impact of our tight labor markets. I also believe the increase in information technology has led to not just a temporary spike in productivity, but instead reflects a fundamental structural change.

The latest CPI figures do not indicate any disturbing signs of inflationary pressures growing. If you remove the spike caused by the surge in energy prices, the CPI is very stable. Additionally it does appear that the higher interest rates imposed in the last year or so have started slowing parts of the economy like the housing market.

I hope that the Chairman has come to the same conclusion that I have - there is no need to raise interest rates again. The Chairman has achieved his goal, although it is one I do not share. The economy has slowed.

I still fear that the further raising of rates by the Fed could slow down the economy so much that we fall into a recession. I will repeat to you what I told you last time you came up here

Mr. Chairman. I do not think you want a recession on your watch, and I know I don't want one on mine. Please do not raise rates again Mr. Chairman. Our economy does not need a monetary policy designed to eliminate inflation that does not exist.

Thank you Mr. Chairman.