"With unemployment still high and declining only gradually, and with inflation running below the Committee's longer-run objective, a highly accommodative monetary policy will remain appropriate for the foreseeable future,"
- Federal Reserve Chairman Ben S. Bernanke
The Federal Reserve Chairman Ben S. Bernanke during his Testimony pointed out that the U.S. central bank anticipates beginning tapering its monthly bond purchases later this year, however, assured that policy will remain accommodative and policymakers will respond to any signs of economic weakness. In addition to that Bernanke warned that the Fed will be looking to the substantial progress in the labour market before considering scaling back the quantitative easing. In case of worsening conditions, the current pace will be maintained or even expanded. The monthly purchases are aimed at lowering long-term borrowing costs and should encourage borrowing and spending.
Amid factors, which could influence the Fed's thinking, Bernanke mentioned sustained economic growth, which is supposed to be restrained by weak global economy and recent budget cuts and tax hikes. At the same time, consumer prices could remain well below the central bank's 2% target, while the unemployment rate could drop just because people are leaving the workforce, but not because of solid hiring.
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