• Inflation to subside in coming quarters to, or below 2% target
• Fed funds like to remain low for an extended period
• No commitment to hold securities at a high level for an extruded period (slightly hawkish)
• no precise read on why slower pace of growth persisting; headwinds from deleveraging may be persisting
• Been in close communication with European colleagues; they understand importance of resolving situation to avoid European and global contagion; mostly monitoring situation and making sure US institutions are prepared
• On asset purchases, bar is higher than a year ago. QE2 eliminated deflation risk; growth in payrolls have picked up
• We are in a different position today; closer to mandate objectives than last August; will monitor economy and act as needed (slightly hawkish, no immediate QE3)
• Should avoid sharp fiscal tightening in very short-run; must be done in medium and long-run
• Explicit inflation target would help anchor inflation expectations; no barrier to setting target (ie does not need Congressional authorization) but would need Congressional buy-in; An ongoing discussion within Fed. Nothing imminent
• Large US banks not significantly exposed to Greece, are exposed to Large European banks; Stress tests show effects on US banks very small; money market mutual funds have substantial exposure to European banks; Effect on US of Greek default would be quite significant, would roil global markets
• Increase and improve bank capital quality to guard against further crisis; extra steps necessary for systemically important banks
• Japanese supply chain problems being resolved; auto prices should fall; oil price decline should too; Output gap still quite large
• Extended period: We don’t know how long…at least two or three meetings; could be longer depending on economic outlook; not there yet; If economy worsens would not change language; retain flexibility based on incoming data; does not want to commit to fixed time frame
• No alternative to being data dependent; no set time on exit strategy
• Bernanke’s personal forecast not extreme; consistent with colleagues; near-term growth less than anticipated
• Must very seriously address overall fiscal situation; very urgent to address long-term deficit
• Could be years away from full employment but faster growth will bring down rate slowly
• Current outlook significantly different from last August; inflation above target now; no deflation risk; labor market performing better than last year (no QE3)
• A number of tools; could buy securities; cut rate paid on excess reserves; give guidance on balance sheet; fixed date to define extended period; all have risks and costs; would be prepared to take additional action is warranted
• On criticism of Japan in early 2000s, says more sympathetic toward central bankers than he used to be; always something central banks can do to fight deflation; Central banks can create money; Bond purchases ended deflation risk
• No formula of unemployment rate or inflation rate for timing exit strategy; dependent on incoming information
• Housing presenting challenges to the recovery; Fed trying to promote employment and income gains; trying to improve mortgage servicing; Fed doing what it can on housing; would like to see market clear, see foreclosed homes sold
• End of presser