Bernanke Speech: Grim Forecast, but No Help Yet
After much hype and speculation, Federal Reserve Chairman Ben Bernanke offered a grim forecast on the nation’s economic recovery in a speech today at a Kansas City Fed economic symposium in Jackson Hole, Wyoming.
Labeling the current economic climate "far from satisfactory," he cited the high unemployment rate--2 points above what the Fed considers "normal"--and low labor utilization.
But he held off on offering any concrete plans from the Fed to revive the economy.
As The Wall Street Journal reported:
The Fed feels it can help address cyclical problems, but not structural problems. In other words, this is a problem where the Fed feels it can help. Of course, he also includes his "no panacea" caveat; Mr. Bernanke would love fiscal policy makers to take actions to support the economy and address long-run deficits. But he doesn't seem to see that as justification for inaction on his front.
Bernanke's Jackson Hole speeches have gotten close scrutiny ever since the Fed chief used his 2010 address to hint at the second round of quantitative easing; some had speculated that Bernanke would once again use the Wyoming venue to unveil QE3.
And some analysts did hear hints of future support from the Fed. CNN Money noted that Bernanke used the speech as a platform to defend easing, and to “pave the way” for more stimulus. Indeed, Bernanke did mention that the Fed would provide “additional policy accommodation as needed to promote a stronger economic recovery.”
Bernanke also seemed to be suggesting, however, that Congress wasn’t doing enough to help the economy. He said the Fed’s monetary policies, such as quantitative easing, can only do so much in bolstering weak markets.
“Monetary policy cannot achieve by itself what a broader and more balanced set of economic policies might achieve; in particular, it cannot neutralize the fiscal and financial risks that the country faces,” Bernanke said. “It certainly cannot fine-tune economic outcomes.”