Federal Reserve Chairman Ben S. Bernanke signaled the Fed will maintain its record monetary stimulus after ending large-scale bond purchases in June, while the need to contain inflation means further easing is unlikely.
“It’s not clear that we can get substantial improvements in payrolls without some additional inflation risk,” Bernanke said at his first press conference following a meeting of the Federal Open Market Committee. “Ultimately, if -- if inflation persists or if inflation expectations begin to move, then there’s no substitute for action,” Bernanke said. “We would have to respond.”
Stocks extended gains, the dollar weakened and Treasuries fell after Bernanke reinforced the view of the FOMC, which released its policy statement today, that borrowing costs are likely to stay low for “an extended period.” The panel agreed to finish $600 billion of Treasury purchases in June and said surging commodity prices will probably have a transitory effect on inflation.
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Comment: The monetary policy of the Fed has become the equivalent to that of the typical "hit and hope"-golfer.
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