FED: Bernanke’s testimony breaks no new ground – keeps exceptionally low
for extended period and does not talk about timing of tightening. Fed
“will at some point need to begin to tighten.” Refers to Feb 10
testimony for the sequencing of tightening. Says pvt demand is growing
at a moderate pace, helped by improved fin’l conditions, and this must
pilot gowth when the inventory cycle wanes. Worries about labor mkt
where best description is just that deterioration “is abating.” Says
“Inflation likely will be subdued for some time.” FOMC will continue to
evaluate securities buys “in light of evolving econ outlook” and Fed is
nomalizing lending. Final TAF to be Mar 8. Mon-Policy Report discusses
policy as econ recovers per Feb 10 testimony, incl talk of RRP vs MBS,
test operations that are then scaled up, hiking rate on reserves (which
could then be used as a policy rate in communications), and securities
sales after tightening begins.