This is an historical moment (sure it is). For the first time, the Fed?s Chief sit in front of cameras to answer questions. Unfortunately, despite being a much hyped event, the event itself is pretty much a non-event.
Just a reminder, the monetary policy has remained unchanged, with interest rate remains at 0-0.25% and the second round of quantitative easing to end by the end of June.
More on the statement here. I have listed a few key differences between the March FOMC statement and the April FOMC statement. Of particular interest to me is the change of wordings from ?The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability? to ?The Committee will regularly review the size and composition of its securities holdings in light of incoming information and is prepared to adjust those holdings as needed to best foster maximum employment and price stability.?
Unfortunately, no one has asked the question that I am most interested to know.
On the whole, it was a waste of time. A much hyped event with no juice at all. Here are some of the keys that I found important:
- Inflation outlook is now higher, so QE3 appears not on the table right now. But?
- If the government cut spending in the short-term, that would be factored into the monetary policy decision
- It doesn?t appear to him that it is right to cut spending right now, but he acknowledged that the fiscal problems is serious, and the congress must agree on some sort of long-term plan to get that in order.
- Inflation is higher because of higher commodity prices, though he viewed that as transitory
- On the exit strategy, the first step is likely to be the end of reinvesting the proceeds from maturing securities
- For now though, reinvesting will continue
- On the language of having accommodative monetary policy for ?extended period?, he said by ?extended period? it means probably a few more FOMC meetings
So basically, for those who think that inflation is high and the Fed should do something, unfortunately you would be better off looking elsewhere.
This article originally appeared here: Ben Bernanke’s Press Briefing 27 April 2011 Highlights
Also sprach Analyst - World & China Economy, Global Finance, Real Estate
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