Federal Reserve Chairman Ben Bernanke is taking a leisurely walk with European Central Bank President Jean-Claude Trichet ahead of key speech in Jackson Hole, Wyoming.
In his speech at the annual Fed retreat he stopped short of offering any new stimulus measures, although he once again admitted…
“It is clear the recovery from the crisis has been much less robust than we had hoped.”
But Allen Sinai of Decision Economics is putting more weight on what the Fed said at its last meeting – when for the first time it put a timestamp on policy, saying rates would stay low until 2013.
“It’s a very, I think, aggressive step and signals the Federal Reserve is committed to do whatever it has to do to deal with the growth side and the employment side of the dual mandate. The blinders are still there on the Doves and Chairman Bernanke: You can’t let the U.S. economy perform this way, you have to do everything you can and then if nothing happens, nothing happens, but you have to do everything you can.”
Wall Street had been betting on Bernanke announcing another round of quantitative easing, dubbed QE3, but instead, Bernanke is extending a one-day policy meeting scheduled for September – to a two-day meeting.
The Fed chief says the extra time is needed for a fuller discussion of the “range of tools that could be used to provide additional monetary stimulus.”
Stimulus Bernanke may feel is needed in order to help get the unemployment rate back down, which is part of his mandate.
Bottom line: Federal Reserve Chairman Ben Bernanke offers few new clues on what tools he will use to get the economic recovery going again in a closely watched speech at a Fed retreat in Jackson Hole, Wyoming.