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Published On: Sun, Sep 2nd, 2012

Ben Bernanke says Fed can do more, setting up another stimulus

Chairman Ben Bernanke made clear Friday that the Federal Reserve will do more to boost the economy because of high U.S. unemployment and an economic recovery that remains “far from satisfactory.”

He also argued that the Fed’s moves so far to keep interest rates at record lows and encourage borrowing and spending have helped bolster the economy.

Bernanke stopped short of committing the Fed to any specific move, such as another round of bond purchases to lower long-term rates.

In a speech at an annual Fed conference in Jackson Hole, Wyoming, Bernanke said that even with rates at super-lows, the Fed can do more.

“We must not lose sight of the daunting economic challenges that confront our nation.”

The most dramatic step the Fed could take would be another round of bond buying. This is known as quantitative easing, or QE. In two rounds of QE, the Fed bought more than $2 trillion of Treasury bonds and mortgage-backed securities. Many investors have been hoping for a third round — QE3— to be unveiled as soon as the Fed’s next policy meeting in September.

“Bernanke has taken a further step along the path to more policy stimulus, most likely a third round of asset purchases (QE3) to be announced at the mid-September FOMC meeting,” said Paul Dales, senior U.S. economist at Capital Economics.

 

Official portrait of Federal Reserve Chairman Ben Bernanke. 2008 public domain photo

 

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About the Author

- Writer and Co-Founder of The Global Dispatch, Brandon has been covering news, offering commentary for years, beginning professionally in 2003 on Crazed Fanboy before expanding into other blogs and sites. Appearing on several radio shows, Brandon has hosted Dispatch Radio, written his first novel (The Rise of the Templar) and completed the three years Global University program in Ministerial Studies to be a pastor. To Contact Brandon email [email protected] ATTN: BRANDON

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