Bernanke spoke today in Atlanta at the International Monetary Conference.
Here are some of the important highlights:
- Accommodative monetary policies are still needed
- The US economy is growing well below potential
- Sees 'prospect of increasing fiscal drag' on recovery
- Hiring accelerating in second half of this year
- Economic growth uneven and frustratingly slow
- Growth likely to pick up in 2nd half of this year
- U.S. urgently needs a credible long-term plan to address budget deficit
- Recent increase in inflation a concern, but not much evidence that it is becoming broad-based, ingrained
- Labor market slack, weak wage growth should continue to have moderating effect on inflation
- Long-term inflation expectations reasonably stable; FED will monitor inflation expectations closely
- Unlikely commodity prices to keep rising at recent rapid pace; most FED officials see recent inflation rise as transitory
- Cannot consider recovery to be truly established until we see a sustained period of stronger job creation
- FED'S efforts to keep inflation low is a positive factor for Dollar
The market reaction to Bernanke's speech was a risk off outcome.
S&P equities fell from 1291 to daily of 1283.5 before closing at 1286.