WASHINGTON (MNI) – The following is the transcript of a response of
Federal Reserve Chairman Ben Bernanke to a question during his Thursday
afternoon news conference:

Bernanke: The ultimate effect is going to depend, of course, how
much we end up doing and that in turn depends what the economy is going
to do. This is a conditional program. We’re going to be providing
accommodation according to how the economy evolves. I think that’s the
virtue of putting it this way is that if the economy is weaker we’ll
provide more support. If the economy strengthens on its own or other
head winds die down, then it will require less support so the amount of
support we provide depends on how the economy evolves.

We do think that these policies can bring interest rates down, not
just treasury rates but a whole range of rates including mortgage rates
and rates for corporate bonds and other types of important interest
rates. It also affects stock prices. It affects other prices, home
prices, for example. So looking at all the different channels of effect,
we think it does have impact on the economy. Will have impact on the
labor market but again, the way I would describe it is a meaningful
effect, a significant effect, but not a panacea, not a solution for the
whole issue. We’re just trying to get the economy moving in the right
direction to make sure that we don’t stagnate at high levels of
unemployment, that we’re making progress towards a more acceptable
levels of unemployment.

—

Bernanke: The problem is that for this purpose that what we’re
looking for is a general improvement in the labor market conditions. We
want to see the unemployment rate come down, but that’s not the only
indicator, obviously, of labor market conditions. Unemployment rate came
down last month because participation fell. That’s not necessarily a
sign of improvement. So we want to see more jobs. We want to see lower
unemployment. We want to see a stronger economy that can cause the
improvement to be sustained. It’s not just a one month or two-month
phenomenon. We’re not going to be looking for little wiggles in the
numbers that’s going to cause us to radically shift our policy. So we at
least at this point have decided to define it qualitatively. I hope I’m
giving you at least a little color in terms of what we’ll be looking
for. We’ll be looking for again an economy which is quickening, that
gives signs of continuing improvement, that allows labor markets to be
stronger. And that will be the type of qualitative criteria that we look
at. We don’t — again, we don’t have a single number that captures that,
but we anticipate that we’ll have to do more and we’ll do enough to make
sure the economy gets on the right track.

** MNI Washington Bureau: 202-371-2121 **

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