Bernanke: Bond-buying plan could create 700,000 jobs over two years

WASHINGTON: Federal Reserve Chairman Ben Bernanke told lawmakers on Capitol Hill that the Fed's $600 billion economic aid program could create 700,000 jobs over two years.

Bernanke made the comments during a private meeting Wednesday with members of the Senate Banking Committee, according to Sen. Richard Shelby, an Alabama Republican, and others who attended the meeting. Bernanke was citing research done by the Federal Reserve Bank of Boston.

The Fed announced on Nov. 3 that it would buy $600 billion worth of Treasury bonds over eight months. The Fed hopes to make loans cheaper and get Americans to spend more, which would rejuvenate the economy and help reduce unemployment.

The Fed chief's meeting on Capitol Hill comes as some Republicans are attacking the bond-purchase program on multiple fronts. They say they fear the plan will spur inflation. They also say the Fed is overstepping its bounds, arguing that the Fed is printing money to pay for the government's massive debt.

Bernanke has rejected those criticisms. He says the Fed's program is needed to help the economy grow faster and to reduce high unemployment.