Fed Chairman Ben Bernanke testified today on the economic outlook before a congressional committee. In his prepared text, he warned against a “premature tightening of monetary policy,” saying it “could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further.”
But then, in his Q&A session, Mr. Bernanke said that QE might be tapered in the next few months if the labor market continues to improve. That very same afternoon, the minutes of the April 30-May 1 FOMC meeting reported: “A number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting if the economic information received by that time showed evidence of sufficiently strong and sustained growth….”
Stock prices soared when Bernanke read his prepared text, but then dropped sharply after the Q&A and the release of the FOMC minutes. The Dow Jones Industrial Average finished the day down 80.41 points, or 0.52%, to 15307.17--having moved 276.44 points from peak to trough.
But then, in his Q&A session, Mr. Bernanke said that QE might be tapered in the next few months if the labor market continues to improve. That very same afternoon, the minutes of the April 30-May 1 FOMC meeting reported: “A number of participants expressed willingness to adjust the flow of purchases downward as early as the June meeting if the economic information received by that time showed evidence of sufficiently strong and sustained growth….”
Stock prices soared when Bernanke read his prepared text, but then dropped sharply after the Q&A and the release of the FOMC minutes. The Dow Jones Industrial Average finished the day down 80.41 points, or 0.52%, to 15307.17--having moved 276.44 points from peak to trough.
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