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Showing posts with label Bernanke: Too early to tell when tapering will start: July 18. Show all posts
Showing posts with label Bernanke: Too early to tell when tapering will start: July 18. Show all posts

Jul 18, 2013

Bernanke: Too early to tell when tapering will start: July 18, 2013 by By: AP with

Ben Bernanke emphasized in his second day of Congressional testimony that monetary policy will not be tighter for the foreseeable future and that it's too early to tell when tapering will begin.

"We have not changed policy. We are not tightening policy," Bernanke said during the question and answer session. He added that none of what the Fed has communicated about winding down its bond purchases implies tighter policy any time soon.

Bernanke again tried to draw the distinction between paring back bond purchases and raising interest rates, implying that policy will remain accommodative even if the Fed ends quantitative easing since rates will remain near zero.

Bernanke said that with inflation below its 2 percent target and unemployment still high it intends to maintain highly accommodative policy for the foreseeable future.

He also said that it was too early to say when the first reduction in bond buying will happen. Bernanke said the Fed wants to see sustainable improvement in labor markets as it weighs reducing bond purchases. 
Panel: Awaiting Bernanke, Day 2
Erik Ristuben, Russell Investments, and Drew Matus, UBS, provide perspective on the Fed's message yesterday on the Hill and weigh in on what Bernanke will likely say when he testifies today before the Senate.

In his prepared remarks, Bernanke said the Federal Reserve's efforts to boost the U.S. economy remain tied to the job market's health and inflation.

The Fed chairman, appearing before the Senate Banking Committee, repeated the message he gave Wednesday to the House Financial Services Committee.

Bernanke said there is no "preset course" for the Fed's $85 billion-a-month bond-buying program: Any change will depend on the economy's performance. He also says the Fed could hold its benchmark short-term interest rate near zero even after unemployment falls below 6.5 percent, particularly if the decline is caused by people leaving the workforce.

The Fed's low interest rate policies have spurred a stock market rally and encouraged more borrowing and spending.

Turning to fiscal policy, Bernanke told the Senate panel that it was not the central bank's place to force Congress to come to any particular outcome. He also said that monetary policy has carried the burden for economic recovery and that Fed actions alone are not producing the desired results.

(Click here to track the U.S. stock market's reaction to Bernanke's testimony.)
-AP with

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