GOP senator to Bernanke: Bond-buying program may need early end

Sen. Mark Kirk (R-Ill.) is suggesting the Federal Reserve may need to stop its bond-buying earlier than expected to help battle inflation.

In a letter to Ben Bernanke, the Fed chairman, Kirk said he was concerned that federal indicators were not keeping up with inflation driven by oil and commodity prices. 

“Once higher inflation gains momentum, it will do great damage to the U.S. economy by stifling small businesses, challenging families and fixed-income seniors,” Kirk’s letter said. 

The senator also noted skepticism from Charles Plosser, the president of the Federal Reserve Bank of Philadelphia, and others about the Fed’s current debt purchasing, which is known as quantitative easing and is set to end in June. 

“The rising price of energy, negative S&P outlook for U.S. debt and broad-based increase in the price of other commodities/goods puts the U.S. in a rapidly changing environment for expected inflation,” Kirk wrote, adding: “Should you also find the trends that I have now heard widely about, you should prepare the Board for an early end to quantitative easing, along with other monetary measures to protect Americans from rising inflation.”

The Federal Open Market Committee, which sets the central bank’s policy, is meeting this week, after which Bernanke is set to give his initial briefing to reporters on the results of that gathering. 

Bernanke has signaled that the current round of quantitative easing, known as QE2, has been a strong defense against deflation, and Janet Yellen, vice chairwoman of the Fed's Board of Governors, said recently that the central bank’s policies weren’t causing jumps in food and oil prices. 

For his part, Kirk also sounded unsure of the current bond-buying when Bernanke appeared before the Senate Banking Committee in March.