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17 Jul 2013
Fed's Bernanke: Asset purchases not 'on a preset course'
FXstreet.com (Barcelona) - According to the prepared text of Chairman Ben Bernanke's speech, to be delivered later today during his Semiannual Monetary Policy Report to the Congress, the pace of the Federal Reserve's bond purchases is not 'on a preset course', as it depends on the current economic and financial situation.
The Fed head assured that signs of recovery are visible in the US labor market, but that “the jobs situation is far from satisfactory, as the unemployment rate remains well above its longer-run normal level.” He also pointed out that inflation is still below the Fed's 2% target. That is why “a highly accommodative monetary policy will remain appropriate for the foreseeable future.”
As far as QE is concerned, Bernanke stressed that the decision on when the tapering should begin depends on the Fed's assessment of the US economic outlook. Should economic data improve earlier than forecasted and inflation rise towards the objective, a reduction could be carried out sooner. Otherwise, “the current pace of purchases could be maintained for longer.”
According to Rob Carnell from ING: :”his speech neither contradicts nor supports the notion that the taper begins in September. The taper might begin then. But as we have written elsewhere, there are quite good reasons why it may occur somewhat later. Not that it really matters all that much anyway – given that the Fed funds decision is one that will be taken independently from QE.”
The Fed head assured that signs of recovery are visible in the US labor market, but that “the jobs situation is far from satisfactory, as the unemployment rate remains well above its longer-run normal level.” He also pointed out that inflation is still below the Fed's 2% target. That is why “a highly accommodative monetary policy will remain appropriate for the foreseeable future.”
As far as QE is concerned, Bernanke stressed that the decision on when the tapering should begin depends on the Fed's assessment of the US economic outlook. Should economic data improve earlier than forecasted and inflation rise towards the objective, a reduction could be carried out sooner. Otherwise, “the current pace of purchases could be maintained for longer.”
According to Rob Carnell from ING: :”his speech neither contradicts nor supports the notion that the taper begins in September. The taper might begin then. But as we have written elsewhere, there are quite good reasons why it may occur somewhat later. Not that it really matters all that much anyway – given that the Fed funds decision is one that will be taken independently from QE.”