Tags: Bernanke | Fed | QE | taper

WSJ: Bernanke's Comments Merely Confirm Status Quo

Thursday, 20 Jun 2013 12:52 PM

By Dan Weil

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While financial markets have plunged in the wake of Federal Reserve Chairman Ben Bernanke's comments Wednesday about tapering and ending the Fed's quantitative easing, policy really hasn't changed, according to a Wall Street Journal editorial.

"All of those market mavens betting for weeks that the Federal Reserve would announce the beginning of the end of its bond purchases were disappointed on Wednesday," The Journal editors write.

"The Fed still runs on Ben Bernanke time, and the chairman is determined to keep his foot on the monetary pedal at least until his second term expires next year."

Editor's Note:
Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

The central bank is currently buying $85 billion of Treasurys and mortgage-backed securities a month.

Bernanke said in his press conference that if the economy grows as the Fed's expects, it will likely curb its purchases later this year and end them around the middle of 2014.

Fed policymakers' central-tendency projections foresee growth of 2.3 to 2.6 percent this year and 3 to 3.5 percent next year.

The Journal editors were unimpressed by Bernanke's forecast of continued bond buying well into 2014 and a stable federal funds rate until 2015.

"How such an accommodative monetary policy meshes with [economic] growth above 3 percent would certainly be interesting. We doubt a near-zero rate would survive the collision," the editorial states.

"For now, though, the Bernanke status quo prevails. Central bankers dominate the world economy, and the transition away from their dominance promises to be turbulent."

Joel Naroff, president of Naroff Economic Advisors, agrees that the Fed isn't changing policy much.

"The Fed right now has the pedal to the metal. And starting sometime near the end of this year or the beginning of next year, they're going to start a slow process of taking their foot off of the pedal," he tells Newsmax TV in an exclusive interview.

"But even when they stop buying, that doesn’t necessarily mean they're not being aggressive."

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

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