WASHINGTON (MNI) – The following are excerpts from Federal Reserve
Chairman Ben Bernanke’s press conference following the Federal Open
Market Committee meeting Wednesday:
QUESTION:
For more than three years now the Fed has conducted policy through
extraordinary means and (…) the new information we have today pertains
mostly to an eventual tightening of policy through raising interest
rates. Why is there no new information about the size of the Fed’s
balance sheet and what should anybody looking at your communications
today deduce about an eventual expansion of the balance sheet through
more asset purchases?
BERNANKE:
So we will be providing in our minutes and in our survey of
economic projections — which will be released in three weeks — we will
be providing some additional qualitative information about people’s,
participants’ views of the balance sheet going forward. The reason that
I cannot provide all of that information now is basically that we
received, you know, a whole range of qualitative comments, and we had
further discussion during the meeting yesterday and today, and so, you
know, we need a little time to summarize that and to have it approved by
you know, the minutes of course, the SEP, are approved by the entire
Committee and so, in that respect it will be a definitive statement of
what we currently know about the balance sheet.
I can say a few things, you know. One is that (…) expanding the
balance sheet certainly remains an option. One that we would consider
very seriously if, in particular, if progress towards full employment
was continued or became more inadequate or if inflation remained
exceptionally low. So we’ll continue to look at that. As we said in our
statement, we’re prepared to take additional measures in general and
that would be certainly one class of measures we would want to consider.
I can make one additional point, which maybe was not obvious, which
is that, in June, we provided some principles relating the sales of
assets, ultimate sales of assets, to the path of interest rates. And
those remain in force — those principles remain in force. And so, one
implication of our extension of our expected point of takeoff to late
2014 is to imply that the initial sales from our balance sheet, which
again are far down the road, but, when that begins, that will be later
than previously thought. That will be presumably in 2015.
So we do expect to hold a balance sheet at a high level for a
longer period. Additional sales, again, I’m sorry, additional purchases,
remains a topic that we are still debating and it will depend both on
our assessment of the efficacy and risks of that particular tool, but
also of how the economy is evolving.
** Market News International Washington Bureau: 202-371-2121 **
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