Bernanke: Fed May Launch New Round of Stimulus

[proteus]

Bernanke: Fed May Launch New Round of Stimulus

« on: Today at 11:25:59 AM »

FROM ANOTHER SITE

Bernanke: Fed May Launch New Round of Stimulus

Federal Reserve Chairman Ben Bernanke told Congress Wednesday that a new stimulus program is in the works that will entail additional asset purchases, the clearest indication yet that the central bank is contemplating another round of monetary easing

Bernanke said in prepared remarks that the economy is growing more slowly than expected, and should that continue the central bank stands at the ready with more accommodating measures.

"Once the temporary shocks that have been holding down economic activity pass, we expect to again see the effects of policy accommodation reflected in stronger economic activity and job creation," he said

"However, given the range of uncertainties about the strength of the recovery and prospects for inflation over the medium term, the Federal Reserve remains prepared to respond should economic developments indicate that an adjustment in the stance of monetary policy would be appropriate."

Markets reacted immediately to the remarks, sending stocks up sharply in a matter of minutes. Gold prices continued to surge past record levels, while Treasury yields moved higher as well.

But some analysts pointed out that, while Bernanke was suggesting the Fed might add stimulus, he also was saying that the current "soft patch" may prove temporary.

"The bottom line is that he has to say he will respond if needed, but it seems he's saying it more as lip service than anything because ultimately he still expects that this slowdown was temporary," said Tom Porcelli, chief U.S. economist for RBS Capital Markets in New York.

The Fed recently completed the second leg of its quantitative easing program, buying $600 billion worth of Treasuries in an effort to boost liquidity and get investors to purchase riskier assets.

While stocks rose about 6 percent through the course of the program, nicknamed QE2 , economic progress has remained elusive.

Delivering his twice-a-year economic report to Congress, Bernanke laid out three options the central bank would consider.

Bernanke said the Fed could launch another round of Treasury bond buying, the third such effort since 2009. It could cut the interest paid to banks on the reserves they hold as a way to encourage them to lend more.

The Fed could also be more explicit in spelling out just how long it planned to keep rates at record-low levels. That would give investors confidence about the Fed's efforts to continue supporting the economy.

Bernanke maintained that temporary factors, such as high food and gas prices, have slowed the economy. He said those factors should ease in the second half of the year and growth should pick up. But if that forecast proves wrong, he said the Fed is prepared to do more.

"The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support," Bernanke told the House Financial Services Committee on the first of two days of Capitol Hill testimony.

Bernanke also said it was possible that inflationary pressures spurred by higher energy and food prices may end up being more persistent than the Fed anticipates.

He said that the central bank would be prepared to start raising interest rates faster than currently contemplated, if prices don't moderate.

Bernanke's comments about inflation spoke to concerns expressed by some regional bank presidents at the Fed. The have criticized the Fed's bond-buying program, saying it has increased the risk for higher inflation.

The Fed has kept its key interest rate at a record low near zero since December 2008. Most private economists believe the Fed will not start raising interest rates until next summer. And some say the Fed won't increase rates until 2013, based on the slumping economy.

Minutes to the central bank's June meeting on Tuesday suggested that, while some members were pondering the possible need for additional easing amid a weak economy, the Fed is not yet ready to take any further action.

But the minutes also reflected divisions within the central bank over further easing, and Bernanke's speech provided a further indicator that a QE3 move is far from off the table.

"Even with the federal funds rate close to zero, we have a number of ways in which we could act to ease financial conditions further," Bernanke said.

Bernanke was testifying after the government released a dismal jobs report last week. The economy added just 18,000 jobs last month, the fewest in nine months.

And the May figures were revised downward to show just 25,000 jobs added—fewer than half of what was initially reported. The unemployment rose to 9.2 percent, the highest rate this year.

Companies pulled back sharply on hiring after adding an average of 215,000 jobs per month from February through April.

The economy typically needs to add 125,000 jobs per month just to keep up with population growth.

And at least twice that many jobs are needed to bring down the unemployment rate.

At the June meeting, the central bank lowered its economic growth forecast for the second half of the year and said unemployment wouldn't fall below 8.6 percent this year.

—AP and Reuters contributed to this report.

^,,^

http://www.cnbc.com/id/43739458

WEBSITE ARTICLE

[Chad Rupple]

these idiots are in so far over their heads ...............complete idiots..

[wpsmit]

FABULOUS idea. The prior round worked so well, let's do it again. Maybe we can hasten our bankruptcy. How bout that "Cash for Clunkers" stimulus? Can that one be retried too?

[2fast4u2c]

Good post

[dinaronmind/mindondinar]

We need a commodity backed treasury note and not the frn, period. Our federal reserve note fiat currency and wall street are twice as corrupt as Iraq. Where is our commodity backed treasury note?

[Richardk]

I'm becoming or have become miffed at our government thinking all we need to do is spend, spend, spend.

They talk about our country going broke but, they have the money to launch another "New Round Of Stimulus"

Talk about "SMOKE AND MIRRORS".

Stay grounded, calm and be happy.

Go RV/RI

[txwaterfowler]

I'm so sick of this subliminal attempt at every turn from this administration suggesting the economy is "growing more slowly than expected". It ain't growing you MORONS! These are the same people that raked G.W. Bush over the coals when he was running for the the first presidency because he dared talk about the signs on the horizon of the impending market crash caused by Clinton's policies. They actually believe him talking about it or noticing it made it happen, haha. Now they think talking good about the economy and stroking it's little mane will urge it along to growth. COMPLETE IDIOTS ALL!

[txwaterfowler]

And talk about smoke and mirrors. I hate with a passion when I see it reported that 250,000 jobs were added. First divide that amongst every city or townin the US, and it doesn't look like much then. And also, how many of those are double and triple counted where someone was fired, someone was hired in their place (+1), they quit or just cant stand the job so someone else is brought in (+1), and then the 2 the left the aforementioned job are hired elswhere to fill vacated jobs (+2), and so on and so forth. Using this approach it looks like 4 jobs were added when it was only 1 or maybe none. It's fuzzy math! Here's a hint to the administration and people that believe we need to tax the wealthy more, the wealthy create the jobs you want, period. Quit stealing from them and they may just have enough resources to bail YOU out by hiring! Quit running down the economy with more taxes and restrictions on consumers and companies, and maybe the economy will grow enough to support the growth of businesses and the addition of jobs. It really is not rocket science!

[tommyboy]

OK: let's see. Our representatives are working OT to resolve the debt crunch we are involved in, and the Fed, who needs NO AUTHORIZATION by anyone decides to print more money, or QE3. QE1 & QE 2 spent enough money to give every person in the US $17,000. What did you do with yours, or did you not see it? The banks and big corporations did ! We got more debt.

This is basically what the Rothchilds did to England after England defeated Napleon. They (Rothschild's representative) got to England first (remember communication was slow then) and said England had been defeated so they were able to buy the pound at a rediculously low price. When all was said and done, they owned England. One famous statement by great, great, great grandaddy Rothschild was something like he didn't care who sits on the throne but the one that controls the money controls the empire. That's what they (AKA the Fed, owned in large part by the Rothchilds) are doing right now.

Hold on to your guns and buy more ammo. It could get nasty.

Seriously !!!!!

Edited July 13, 2011 by tommyboy

[Cherysh]

OMG, they are nuts!!!

[danmiller]

from what i see you people could run this addmin mutch better better than they can .God bless USA.call them, and say no to anymore stim packs.like that would do anything !!were turning into china.if you own land like me they have ther eyes on it and they want it!! over my dead body!!if thats what it takes. sooo be it.

sorry just venting!

[tjmunson]

The Titanic sank fast, the QE3 will sink even faster

Peace