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  • Bernanke says tapering not on ‘preset’ path



    marketwatch.com

    “I emphasize that, because our asset purchases depend on economic and financial developments, they are by no means on a preset course,” Bernanke said in remarks to the House Financial Services Committee.

    Markets reacted positively, perhaps believing that Bernanke was pulling back from a timetable to taper “later this year,” said Michael Moran, chief U.S. economist at Daiwa Securities in New York.

    Instead, “Bernanke kept the door open for tapering, but said it is data-dependent,” Moran said.

    The Fed would like to taper but will only do so if they see a faster growth rate or improvement in the labor market, he added.

    U.S. stocks were off their highs from earlier in the trading session but stayed in positive territory. The S&P 500 index rose 5.8 points to 1,682. There was not much volatility during the question-and-answer session. Treasury prices rose.

    Bernanke repeated his guidance from mid-June that the Fed anticipates it will be appropriate to begin to moderate the pace of the $85 billion asset-purchase plan “later this year” and end them “around midyear” in 2014, if the economy evolves as forecast.

    If economic conditions were to improve faster that expected, the pace of asset purchases could be reduced “somewhat more quickly.”

    “On the other hand, if the outlook for employment were to become relatively less favorable, if inflation did not appear to be moving back toward 2%, or if financial conditions — which have tightened recently — were judged to be insufficiently accommodative to allow us to attain our mandated objectives, the current pace of purchases could be maintained for longer,” Bernanke said.


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