WASHINGTON (MNI) – The following is an excerpt from Federal Reserve
Chairman Ben Bernanke’s press conference Wednesday.
QUESTION: Given the environment that you sketched out and the fact
that interest rates are at historically low points, would it make sense,
would it be an option for the government to issue more long-term debt at
this point and take advantage of that?
BERNANKE: Well, the government is very gradually increasing the
duration of its debt the Treasury I mean, and its has been doing that
for some period of time. There is a bit of an issue here, which is that
what the Federal Reserve is doing with the program we announced today,
the maturity extension program, is we are taking longer-term debt off
the market in order to induce investors to move into other assets and to
lower longer-term interest rates. To the extent that the treasury
actively sought to lengthen the duration of its borrowing, it would to
some extent offset the benefits of those policies. So my understanding
of what the Treasury is doing, is that they have a plan, they are
sticking to that plan, and therefore on the margin the effects of the
Fed’s actions can be felt.
** MNI Washington Bureau: 202-371-2121 **
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