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| Version 1 | Version 2 |
|---|---|
| Federal Reserve's Ben Bernanke aims to reassure markets | Federal Reserve's Ben Bernanke aims to reassure markets |
| (about 3 hours later) | |
| Federal Reserve chairman Ben Bernanke, in his bi-annual testimony to Congress, sought to reassure markets about plans for ending its policy of easy money. | |
| Mr Bernanke said the end to easy money was not on a "preset course". | |
| He defended the bank's transparency policy, saying "markets are beginning to understand our message and volatility has moderated". | He defended the bank's transparency policy, saying "markets are beginning to understand our message and volatility has moderated". |
| His comments in May suggesting that the bank might end its purchase of bonds had led markets to fluctuate wildly. | His comments in May suggesting that the bank might end its purchase of bonds had led markets to fluctuate wildly. |
| For months, each utterance by Mr Bernanke and his fellow Fed officials has been scrutinised for hints of when the flow of easy money might be turned off or tightened. | For months, each utterance by Mr Bernanke and his fellow Fed officials has been scrutinised for hints of when the flow of easy money might be turned off or tightened. |
| Painting into a corner | Painting into a corner |
| By buying up bonds, the Fed has tried to lower long-term interest rates in the hopes of spurring economic activity. Lower long-term interest rates should encourage consumers and businesses to take out loans for everything from homes to new equipment. | By buying up bonds, the Fed has tried to lower long-term interest rates in the hopes of spurring economic activity. Lower long-term interest rates should encourage consumers and businesses to take out loans for everything from homes to new equipment. |
| Yields on 10-year US Treasury bonds hit two-year highs and mortgage rates spiked as fears about the end of easy money led many traders to rebalance their portfolios. | |
| In his testimony, Mr Bernanke sought to reassure markets once and for all that winding up - or tapering - the programme - would not happen until the US economy was on solid footing. | |
| A spate of weak economic data - including sluggish retail sales this week - might give the Fed pause as it looks to start tapering in September. | A spate of weak economic data - including sluggish retail sales this week - might give the Fed pause as it looks to start tapering in September. |
| And, as Mr Bernanke's term comes to an end, the deliberate attempts to keep the Fed policy open and flexible might be as much about the current Fed make-up as its future. | |
| "My expectation is that chairman Bernanke wants to leave the next chairperson of the Fed with as much policy latitude as he can and not paint that person into a corner," says chief market strategist Steve Wood of the Russell Investment Group. | "My expectation is that chairman Bernanke wants to leave the next chairperson of the Fed with as much policy latitude as he can and not paint that person into a corner," says chief market strategist Steve Wood of the Russell Investment Group. |
| In a light-hearted moment, House Representative Bill Huizenga asked Mr Bernanke if a friend should refinance his house now or later - a reference to the market volatility that this flexibility has perhaps instigated. | In a light-hearted moment, House Representative Bill Huizenga asked Mr Bernanke if a friend should refinance his house now or later - a reference to the market volatility that this flexibility has perhaps instigated. |
| "I'm not qualified to respond as a financial adviser," Mr Bernanke joked, while again emphasising the Fed's commitment to seeing the US economy through the recovery process. |