Post by jeffolie on Sept 18, 2013 12:48:14 GMT -6
The Fed won't raise rates if inflation remains far below the 2% target, Bernanke says. And the Fed's projections don't see the inflation rate exceeding 2% for the foreseeable future.
11:42 am
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Here's an interactive timeline of the quantitative easing decisions.
11:40 am
by RN
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Economic data do not yet provide sufficient confirmation to warrant a reduction in the bond purchases, Bernanke says.
Moreover, the uncertainty about a government shutdown or a default caused by the breaching of the debt ceiling provide an additional risk to the economy, he says.
11:38 am
by RN
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Bernanke goes through the evidence that the labor market is improving, on net.
Jobless claims are down.
Hours of work are up.
Consumers say jobs are more plentiful.
However, the labor force participation rate is down, and wages are flat.
11:35 am
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Here's what didn't rally on the news - the $VIX, which is down 8% pic.twitter.com/mIzBfKLcXQ
— Laura Mandaro (@lauramandaro) September 18, 2013
11:35 am
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To my hard money friends: Monetary policy would look very different if only Congress stopped trying to choke off the recovery.
— Justin Wolfers (@justinwolfers) September 18, 2013
11:33 am
by RN
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The recent rise in bond yields and the Congress are restraining the economy and are downside risks to the Fed's forecast of modest growth, Bernanke says.
11:31 am
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Not claiming to be exhaustive list, but the following economists said no taper today:
Ethan Harris of BofA/Merrill Lynch
Julia Coronado of BNP Paribas
Avery Shenfeld of CIBC
Paul Edelstein of IHS Global Insight
11:31 am
by RN
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Bernanke begins his press conference by reading a short statement, largely echoing the official statement.
He says the labor market is improving but is not satisfactory.
11:28 am
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Eric Green of TD Securities: "This FOMC edition feels less dovish than it does outright scared. The effect, of course is the same, in spades... Confidence in the outlook has dimmed. That Bernanke had a free pass to begin that tapering process and chose not to follow is telling. "
11:26 am
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The Fed didn't change any policies at its two-day meeting, but the statement underwent a significant re-write, all designed to explain why the Fed didn't reduce the pace of its bond buying as many expected.
One big change was this mention of how the bond market had already tightened financial conditions ahead of any change in official policy: "the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market."
The Fed continued to see the economy as improving at a moderate pace. Members expect that the economy will continue to advance, but the new wrinkle was the caution shown here: "The Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases."
As before, the committee emphasized that its decision on the timing of any tapering would depend on the outlook for the economy, not on a pre-set timetable.
Considering the broad expectation for a tiny taper today, the markets likely got the message this time that the Fed won't be bullied, nor will it precommit itself to tightening until the data give the OK signal.
blogs.marketwatch.com/capitolreport/2013/09/18/live-blog-and-video-of-fed-taper-decision-and-bernanke-press-conference/