Ben Bernanke pulls back curtain on Federal Reserve in first-ever briefing
Ben Bernanke held a press conference Wednesday – the first of its kind by a Federal Reserve chief. He said the US economy is improving, but there are few levers the Federal Reserve can pull now to speed up the process.
In a first-ever press conference Wednesday, Federal Reserve Chairman Ben Bernanke avowed himself to be bullish on America's economic future, but that the recovery would take time and that the Federal Reserve can't provide a lot more help as a bridge to that brighter future.Skip to next paragraph
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Along these lines, he emphasized several key topics:
• Unemployment. He said the Federal Reserve's economic forecast is that unemployment will remain above normal even in 2013.
• Stimulus. He implied that, despite the high jobless rate, the Federal Reserve is unlikely to expand its efforts to stimulate the economy.
• Gas prices. While saying the Federal Reserve is on guard against wider inflation, Mr. Bernanke said his policy team can do little directly about burdensome gasoline prices.
• QE2. Bernanke said that a controversial effort to boost the economy, called a second round of "quantitative easing" (or QE2), would come to an end as planned at mid-year. In the QE2, the Federal Reserve bought Treasury bonds and other securities in an attempt to fuel growth by lowering real long-term interest rates and boosting the price of assets like stocks. Bernanke signaled that it was unlikely the Federal Reserve would enact a QE3 policy.
The reason: The economy has improved over the past year, while inflation risks if anything appear to be rising. "The tradeoffs are getting less attractive at this point," Bernanke said. He said it was uncertain that such a policy could boost job growth further "without some additional inflation risk."
But he responded to critics who have argued that QE2 has done little good. Bernanke said that financial markets responded positively at a time when the Federal Reserve couldn't cut short-term interest rates (already at zero) any further. But he said the central bank never billed QE2 as a panacea.
This was the first of what will now be quarterly news conferences, following scheduled policy meetings. At Wednesday's meeting, the Federal Reserve's Open Market Committee made little formal change in policy. The committee said it expected interest rates to remain low for "an extended period."