
Bernanke Reiterates Fed Commitment to Accommodative Policy
Federal Reserve Chairman Ben Bernanke reaffirmed the central bank’s commitment to a highly accommodative monetary policy during a speech at the National Economists Club in Washington. He stated that the bank’s $85 billion-a-month asset purchase program will continue depending on economic conditions, emphasizing that there is no predetermined course for the program.
Bernanke indicated that the Federal Reserve would begin tapering its stimulus measures only when there is confidence in a sustainable recovery in the labor market. For the first time, he outlined specific labor market indicators that policymakers may monitor, such as job growth, labor force participation, and hiring rates.
He also mentioned that interest rates are likely to remain near zero for an extended period following the conclusion of the stimulus program.
“I share the view expressed by my colleague Janet Yellen during her recent testimony that the most effective way to move towards a more standard approach to monetary policy is to fully support a stronger recovery today,” he remarked.
Janet Yellen, currently the Fed’s vice chairwoman, has been nominated by President Barack Obama as Bernanke’s successor when his term ends in January. The Senate Banking Committee held a confirmation hearing for Yellen last week and is scheduled to vote on her nomination soon.
Bernanke emphasized the significance of transparency and improved communication in the implementation of monetary policy. “In the wake of a financial crisis and a deep recession, our communications regarding monetary policy have evolved in unforeseen ways over the past eight years. Transparency remains a crucial aspect of the Federal Reserve’s strategy for achieving its economic objectives,” he noted.
The Federal Reserve’s next policy meeting is set for December 17-18, although many economists anticipate that there will be no changes to the easing program until early next year.