Fed Chief Bernanke Issues Strong Hint Of Further Stimulus
As the AP reads it, Federal Reserve Chairman Ben Bernanke stopped just short of "committing the Fed to any specific move, such as another round of bond purchases to lower long-term interest rates."
Bernanke gave a speech at the Federal Reserve Bank of Kansas City Economic Symposium in Jackson Hole, Wy. today. As with all his speeches, it was being closely watched for signs on what the Federal Reserve would do next.
With the unemployment rate stagnant, would the Fed unleash further stimulus? Or would the relative good news on the consumer spending and housing fronts we've gotten in recent weeks be enough to stave off new action?
The New York Times came to a similar conclusion as the AP, saying that Bernanke pushed "hard for new steps to spur growth."
Here's a key part taken from the chairman's prepared remarks. You can decide what it means:
"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.
"Over the past five years, the Federal Reserve has acted to support economic growth and foster job creation, and it is important to achieve further progress, particularly in the labor market."
Thefull text of the chairman's speech is posted on the Federal Reserve website.
Update at 10:40 a.m. ET. More Mixed Messages:
The AP reports on another piece of economic news, which is also mixed:
"Factory orders rose 2.8 percent in July, the biggest overall advance in a year, reflecting sizable gains in demand for motor vehicles and airplanes, the Commerce Department said Friday. But core capital goods orders, viewed as a good proxy for investment spending, plunged 4 percent, the fourth setback in the past five months."
Update at 10:27 a.m. ET. Markets Rally:
The Dow jumped more than 100 points and the Nasdaq jumped about half a percent, after the news.
Update at 10:18 a.m. ET. CNBC Has A Different Reading:
CNBC is rolling with this headline: "Bernanke at Jackson Hole: No More Fed Easing, For Now."
The network says the speech is simply a reiteration of what he said after the Fed's Open Markets Committee meeting Aug. 1.
We'll note that in that statement, the Fed was using phrases like " Growth in employment has been slow..." This time around they use the term "stagnant."
Copyright 2021 NPR. To see more, visit https://www.npr.org.