US Fed signals no monetary stimulus
JACKSON HOLE - Reuters
Ben Bernanke disappointed markets by not pronouncing a direct monetary stimulus. AP PhotoU.S. Federal Reserve Chairman Ben Bernanke on Aug. 31 said his country’s economy faced “daunting” challenges and that progress reducing unemployment had been too slow, but he stopped short of providing a clear signal of further monetary policy easing.
Bernanke said the central bank would act as needed to strengthen the recovery but he also said it had to weigh the costs as well as the benefits of more monetary stimulus, although he hinted the costs may be worthwhile.
“It is important to achieve further progress, particularly in the labor market,” Bernanke said at the Kansas City Fed’s annual Jackson Hole symposium. “Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”
That was a somewhat weaker hint of policy easing than the minutes of the Fed’s last policy meeting had delivered. At that meeting, many members judged that “additional monetary accommodation would likely be warranted fairly soon” unless the economy showed substantial strengthening.
Labor market concerning
Bernanke, however, made clear he was not satisfied with the economy’s progress. “The stagnation of the labor market in particular is a grave concern not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last for many years,” he said.