Fed Adopts Political Tactics on Critics

By SEWELL CHAN
NYT

WASHINGTON — Faced with unusually sharp ideological attacks after its latest bid to stimulate the economy, the Federal Reserve now faces a challenge far removed from the conduct of monetary policy: how to defend itself in a hyperpartisan environment without becoming overtly political.

Caught off guard by accusations from Congressional Republicans, Sarah Palin, Tea Party activists and conservative economists, the central bank and its chairman, Ben S. Bernanke, are pushing back, making their case on substantive grounds but also haltingly adopting the tactics of Washington battle, like strategically placed interviews, behind-the-scenes assuaging of opponents and reaching out to potential allies on Capitol Hill.

The stakes are high. Last week, one House conservative announced legislation to strip the Fed of its mandate to promote jobs and have it focus solely on containing inflation.

The attacks, coupled with criticism from foreign officials, have introduced enough uncertainty into global financial markets to potentially undercut the Fed’s plan to drive down interest rates, which rise or fall as investors anticipate Fed action.

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