Comments from Ben Bernanke, Fed Chairman, at rare press conference:
1. “With output growth likely to be moderate for a while and with employers reportedly still reluctant to add to their payrolls, it will be several years before the unemployment rate has returned to a more normal level. Until we see a sustained period of strong job creation, we cannot consider the recovery to be fully established.â€
2. Bernanke said “Higher oil prices are a kind of a tax†and said the U.S. is trying to create more domestic confidence. He called higher prices a negative on household budgets.
3. “Right now, inflation is quite low including food and energy and we need to make sure it stays that way.â€
4. “Purpose of QE2 is not to increase stock prices per se, but to strengthen the U.S. economy…the way monetary policy also works is through interest rates and asset prices. This has led to lower stock market volatility and higher stock prices…We’ve taken some securities out of the market and pushed investors into some alternative investments…We are getting rid of the risk of deflation and things are moving in the right direction.â€
5. He called the U.S.’s fiscal position “daunting.â€
6. The economy has to grow about 2.5% just to accommodate people entering the labour force.
7. Bernanke will testify before the House Budget Committee on 9 February.
8. Companies holding off on hiring because they are unsure about demand.
9. “Markets are behaving (as if the U.S. government will be able to borrow at low rates of interest in the future).â€
10. There is “substantial slack†in the economy.
11. The Fed may move to hold press conferences in the future.
12. Bernanke linked higher commodities prices to greater demand from the emerging markets and not the Fed’s monetary policy.
