Ben Bernanke attempted to reassure investors and economists this afternoon that the Federal Reserve’s money-printing programs will not lead to higher inflation.
In a speech at the University of Michigan, the Fed Chairman stated that “I don’t believe significant inflation is going to be the result” of the central bank’s quantitative easing measures.
Bernanke added that he believes the Fed has the tools to remove the ultra-accommodative monetary policies before inflation would take hold. Unfortunately for his critics, he did not expound on the rationale behind this belief.
Bernanke went on to say that it would very misguided of the Fed to “raise interest rates prematurely.”
As for the current state of the U.S. economy, he stated that it remains in a “relatively fragile recovery.”
While Bernanke’s comments were undoubtedly dovish, financial markets showed a muted reaction. Gold futures remained near unchanged at $1,668 per ounce while the S&P 550 futures contract inched up by just 0.80 points to 1,465.10.
Bernanke’s speech can be viewed in its entirety at http://www.fordschool.umich.edu/streaming/bernanke/index.php
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