Bernanke Signals Fed Target Rate to Stay Low After QE

“Federal Reserve Chairman Ben S. Bernanke said the Fed will probably hold down its target interest rate long after ending $85 billion in monthly bond buying, and possibly after unemployment falls below 6.5 percent.  ‘The target for the federal funds rate is likely to remain near zero for a considerable time after the asset purchases end, perhaps well after’ the jobless rate breaches the Fed’s 6.5 percent threshold, Bernanke said yesterday in a speech to economists in Washington. A ‘preponderance of data’ will be needed to begin removing accommodation, he said.” “In deciding when to wind down open-ended purchases of bonds, Fed officials are weighing both the ‘cumulative progress’ since they began the program in September 2012 as well as ‘the prospect for continued gains,’ Bernanke said. The labor market has shown ‘meaningful improvement’ since the start of the program.  Policy makers are debating how to slow the pace of asset purchases without causing a surge in interest rates that could jeopardize the more than four-year economic expansion. Central bankers have sought to convince investors that tapering bond purchases wouldn’t signal that an increase in the benchmark interest rate is any closer.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

Post a Comment


Subscribe to: Post Comments (RSS2)