Federal Reserve Chairman Ben Bernanke

[Carrello]

Jackson Hole conference

Fri Aug 26, 2011 10:00am EDT

JACKSON HOLE, Wyoming, Aug 26 (Reuters) - The following are

highlights of Federal Reserve Chairman Ben Bernanke's speech on

Friday to a central bank conference sponsored by the Kansas

City Federal Reserve Bank.

On economic growth, inflation outlook: "The recent data have

indicated that economic growth during

the first half of this year was considerably slower than the

Federal Open Market Committee had been expecting, and that

temporary factors can account for only a portion of the

economic weakness that we have observed. Consequently, although

we expect a moderate recovery to continue and indeed to

strengthen over time, the Committee has marked down its outlook

for the likely pace of growth over coming quarters. "With commodity

prices and other import prices moderating

and with longer-term inflation expectations remaining stable,

we expect inflation to settle, over coming quarters, at levels

at or below the rate of 2 percent, or a bit less, that most

Committee participants view as being consistent with our dual

mandate.

" On what the Fed's recent policy decision means:

"We indicated that economic conditions -- including low

rates of resource utilization and a subdued outlook for

inflation over the medium run -- are likely to warrant

exceptionally low levels for the federal funds rate at least

through mid-2013. That is, in what the Committee judges to be

the most likely scenarios for resource utilization and

inflation in the medium term, the target for the federal funds

rate would be held at its current low levels for at least two

more years."

On what other tools the Fed has: "In addition to refining our

forward guidance, the Federal

Reserve has a range of tools that could be used to provide

additional monetary stimulus. We discussed the relative merits

and costs of such tools at our August meeting. We will continue

to consider those and other pertinent issues, including of

course economic and financial developments, at our meeting in

September, which has been scheduled for two days (the 20th and

the 21st) instead of one to allow a fuller discussion. The

Committee will continue to assess the economic outlook in light

of incoming information and is prepared to employ its tools as

appropriate to promote a stronger economic recovery in a

context of price stability

." On market volatility: "Financial stress has been and continues to be a

significant drag on the recovery, both here and abroad. Bouts

of sharp volatility and risk aversion in markets have recently

reemerged in reaction to concerns about both European sovereign

debts and developments related to the U.S. fiscal situation,

including the recent downgrade of the U.S. long-term credit

rating by one of the major rating agencies and the controversy

concerning the raising of the U.S. federal debt ceiling. It is

difficult to judge by how much these developments have affected

economic activity thus far, but there seems little doubt that

they have hurt household and business confidence and that they

pose ongoing risks to growth. The Federal Reserve continues to

monitor developments in financial markets and institutions

closely and is in frequent contact with policymakers in Europe

and elsewhere." On long-term economic growth prospects:

"It may take some time, but we can reasonably expect to see

a return to growth rates and employment levels consistent with

those underlying fundamentals ... Notwithstanding the severe

difficulties we currently face, I do not expect the long-run

growth potential of the U.S. economy to be materially affected

by the crisis and the recession if -- and I stress if -- our

country takes the necessary steps to secure that outcome

." On the impact of monetary and fiscal policy:

"Normally, monetary or fiscal policies aimed primarily at

promoting a faster pace of economic recovery in the near term

would not be expected to significantly affect the longer-term

performance of the economy. However, current circumstances may

be an exception to that standard view ... The quality of

economic policymaking in the United States will heavily

influence the nation's longer-term prospects. To allow the

economy to grow at its full potential, policymakers must work

to promote macroeconomic and financial stability; adopt

effective tax, trade, and regulatory policies; foster the

development of a skilled workforce; encourage productive

investment, both private and public; and provide appropriate

support for research and development and for the adoption of

new technologies."

http://www.reuters.com/article/2011/08/26/usa-fed-idUSN1E77O18V20110826idUSN1E77O18V20110826ttp://"]My link[/url]

Edited August 26, 2011 by Carrello

[wpsmit]

Good stuff

[jstagrl]

Thanks Carello

[Jmcc]

Thanks Carello! Was just on another thread about this and can't believe the number of people that didn't know this was happening. All over the news. Those that are invested should pay attention.