Bernanke Signals Flexibility on Tapering

My Comments: A few weeks ago, the Federal Reserve Board met and then Ben Bernanke made some comments to the effect that what is knows as Quantitative Easing, or QE, was about to end. The markets went nuts, the day to day volatility in the markets was off the charts, and investors were not happy campers.

Mind you, this period of artificial pressure on the markets will end one of these days, and probably sooner rather than later. But many of us wish Bernanke had the skill set exhibited by his predecessor, Alan Greenspan. He always used strange words and phrasing that allowed the markets several days to figure out what he meant. This kept the volatility in check.

Anyway, these comments below are important to those of you who watch your investments day to day as the QE efforts of the Fed will end, hopefully leading to a greater degree of stability and predictability.

July 17, 2013

Chairman tells lawmakers Fed plans to keep monetary policy accommodative even after QE ends

Federal Reserve Board Chairman Ben Bernanke told lawmakers Wednesday that if the economy fails to satisfy the Fed’s expectations, its plans to taper bond buying could change and the Fed could even “potentially increase purchases for a time.”

The economy continues to recover at a “moderate pace,” with housing having contributed “significantly” to recent gains, but the unemployment rate is only seeing “moderate” improvement — standing at 7.6% in June, Bernanke said in the Fed’s semiannual monetary report to members of the House Financial Services Committee.

Bernanke signaled to the committee that the Fed would adjust its bond-buying program — better known as quantitative easing — depending on how the economy performs. “Our intention is to keep monetary policy accommodative,” he said.
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