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
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
- 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."
The Federal Reserve's goal in broadcasting the events on its
website is to increase public understanding of the central bank at a
time when Americans are deeply concerned about the economy - and
when the Federal Reserve is concerned about its own political
standing with Congress. …