Ben Bernanke: Federal Reserve Not 'Out Of Ammunition' Yet

WASHINGTON -- The Federal Reserve's announcement that it is unlikely to raise its benchmark interest rate until late 2014 is simply its "best guess," Ben Bernanke said Wednesday.

The Fed chairman made clear during a news conference Wednesday that the decision to leave interest rates unchanged for three more years was not ironclad.

The central bank's ability to forecast that far out is limited, Bernanke says, and the Fed could adjust the timetable for when it will raise rates if economic conditions change.

Still, he said the U.S. economy remains weak and all signs suggest the Fed won't change its record-low rate for another three years.

"We have to make a best guess," Bernanke said after the Fed concluded its two-day policy meeting. "Unless there is a substantial strengthening of the economy in the near term, I would think that it's a pretty good guess that we will be keeping rates low for some time from now."

The central bank has kept its key rate at a record low near zero for three years.

Bernanke also said the Fed has not ruled out bolder steps to boost economic growth, such as a third round of bond purchases.

"If inflation is going to remain below target for an extended period and unemployment progress is very slow ... there is a case for additional policy action," he said.

"I would not say we are out of ammunition. We still have tools."

Prior to the news conference, the Fed slightly reduced its outlook for U.S. economic growth this year. It forecasts the economy to grow between 2.2 percent and 2.7 percent in 2012, according to its updated economic forecasts. That's down from November's forecast of between 2.5 percent and 2.9 percent.

Many economists expect Europe will suffer a recession this year, which will slow U.S. growth.

Still, the Fed said it expects unemployment to fall as low as 8.2 percent. That's an improvement from November's forecast of 8.5 percent. The unemployment rate fell to 8.5 percent in December after the sixth straight month of solid hiring.

Inflation has been relatively tame and the Fed doesn't see that changing over the next three years.

The Fed's policies have made Bernanke a popular target for Republican presidential hopefuls. Several have criticized Bernanke for raising the risk of higher inflation.

Bernanke refused to answer a question asking whether he would resign if one of his critics wins the November election.

"I'm not going to get involved in political rhetoric," Bernanke said. "I have a job to do and as long as I'm here I will do everything I can to help the Federal Reserve. ... That's my answer."

Comments

[Gene Epstein]

09:35 AM on 01/29/2012

Without an act of Congress if the Fed's regulate the amount of Treasury notes that the banks are allowed to purchase by insisting that a percentage must go into new small business loans I think that may free up the money needed to get some things started...
Your thoughts?
Check out www.hirejustone.org and lets create one million jobs in 120 days.
Gene Epstein ,founder

[Corie Lemmon]

06:41 AM on 01/26/2012

cost of living should only be able to be increased if at least 80% of people get cost of living raises too. How can we constantly be expected to live on less and less? While the rich live on more and more. I would like to see the rich have to choose between food and bills, or even deal with the financial stress most people have to deal with

[PotomacOracle]

08:25 PM on 01/25/2012

Benny is playing us. He knows that he can issue debt-free fiat currency anytime he wants. He's got his target rate at zero where it should be. So why not credit the Treasury general fund $20 trillion zero interest rate dollars, then Treasury allocates $!0,000 checks to every adult American.

For the sake of appearance and to stifle the Debt Nazis and the Deficit Terrorists, Treasury would then credit the SS/M/M accounts on annual basis to cover all obligations. No other developed nation pays in advance for SS type benefits. They do a pay-go system. We don't pay for wars in advance why SS?

Benny knows that deficits and debt really don't matter in a nation with a sovereign currency. He knows that automatic stabilizers will guard against inflation. That is, it taxes or adjusts interest rates to reduce our spending. The Gov. doesn't need to raise revenue thru taxes because it can issue all of the fiat currency it wants. Makes sense to me.

Therefore, the other bit of ammo government has during this recession is to cut tax rates by, say, 90% for every individual and business. This can be done in a nation that doesn't need taxes as a source of revenue. Besides federal taxes don't pay for anything. You see the federal government has to issue its fiat currency before it can take some of it back in taxes. So it spends first and then taxes no revenue needed.

[PotomacOracle]

07:56 PM on 01/25/2012

Bernanke said. "I have a job to do and as long as I'm here I will do everything I can to help the Federal Reserve. ... That's my answer."

That says it all. He will do everything he can to help the Fed. What about doing everything you can to help America? Oh I'm sorry, you don't work for America, my bad.

[Boston 019]

08:15 PM on 01/25/2012

Amen.

[Robson]

06:59 PM on 01/25/2012

Ben Bernanke is keeping interest rates artificially low to help his grossly overpaid crony financier flock of NYC bankster thieves (those responsible for the bubble and crash) lock in money flow to the equity market from the many millions of underpaid overworked American sheeple who otherwise would be saving in CDs etc instead of giving up their hard earned money to a casino of risk run by financial insiders.

The Federal Reserve is a boon to bankers and a burden of corruption to most Americans. Believe the media propaganda about Bernanke and the Fed if you wish, but they are serving their own and not objectively serving the USA. This will catch the street money (naive money) again as it did in 2007/8/9 and the smart money will walk away with your taxes.

Ron Paul has been 100% correct on this. Unlimited trillions in money from the Fed and the tribe that colludes with them and that benefits feeding a sympathetic media, is more than enough to convince the sheep that he is the wacko. He isn't, but most of us are not smart enough to override the propaganda.

[Boston 019]

08:17 PM on 01/25/2012

Pretty much. Dr. Paul is the medicine this country refuses to take. Everything hinges on civil liberties and the strength of the dollar. This November, the media will talk about abortion, gay marriage, and wars. They'll neglect to mention that the best country in the world is on the brink of total collapse... and that if America fails, we have no where else to go. If we don't fix these problems immediately, humanity will find itself in another Dark Age.

[noahmarder]

05:27 PM on 01/25/2012

So with real inflation (counting the goods that the CPI conveniently ignores) hovering around 10%, this clown wants to keep interest rates near zero? The mere existence of the Federal Reserve and fiat currency is a violation of our fourth amendment rights against improper seizure. Yes, runaway inflation engineered by the government for the benefit of the banks (cheaper loans with which to play their destructive games) and itself (to save on Social Security payments by increasing the spread between the CPI and true inflation), is improper seizure.

We need to go back to the silver (or gold) standard and stop the corporate welfare. Things may get worse in the short term, but we will be much better off in the long run. A fiat currency is only as sound as the trustworthiness of those who control it. Do you trust Ben Bernanke?

[SisterAnn]

05:43 PM on 01/25/2012

They used to say, 'If interest rates are high, stocks will die.'

We are dealing with the financially gifted and I have thought for several years that the government, Wall Street and the Federal Reserve were going to great lengths to do something. If they were trying to trash Social Security or Medicare they have just about done it. .. They trashed the market twice already.

Bernanke also said something about QE...

With him keeping interest that low he must want inflation to help pay off the debt. If they want inflation they are going to have to hire a lot of people and pay them higher wages. lol

I don't know how inflation will affect Social Security but we do get a cost of living increase.

So, why the most important story Bernake, today? It seems like a rerun, same ol, same ol.

Whatever they are trying to do, they are costing themselves a lot of money.

[noahmarder]

02:11 AM on 01/26/2012

The government uses the CPI (consumer price index) to determine cost of living increases to social security. The fraud is that the CPI doesn't count food, gas, or anything else deemed volatile (read: increasing in price quickly). The government saves the spread between the CPI and the true inflation rate (counting what the CPI excludes). It is easier to create a big spread if inflation itself is high.

The banks want lower interest rates because most of the deals they make are highly leveraged (meaning they borrow money with which to invest). The lower the interest rates, the cheaper it is to borrow. Cheaper borrowing means that banks can profitably leverage their investments to even higher ratios. It also allows them to offer lower interest rates to borrowers, since all they are concerned about is the spread between what they pay to borrow and what they charge us. Essentially, lower interest rates give them more customers while the government (who lent the money to the banks at the low rate) loses.

We are not dealing with the financially gifted, as the concepts aren't that difficult. What we are dealing with is the financially corrupt. You may think they are costing themselves a lot of money, but believe me, the puppets making these "decisions" are being well compensated by their banker overlords.

We The People are the ones losing a lot of money.

[PotomacOracle]

07:54 PM on 01/25/2012

No nation has prospered very long under species backed currency. Do you trust the commodity speculators?

[noahmarder]

08:36 PM on 01/25/2012

Those speculators will pack far less clout when the exchange of US dollars (for any purpose) is equivalent to a trade of silver (or gold). I support a financial transactions tax anyway, which would serve to rein in the speculators. What exactly do you mean by "species backed currency"? The United States backed its currency with either gold or silver for the vast majority of its existence. In fact, most of the developed world was using currency backed by silver up until WWII.

[marignymitch]

05:21 PM on 01/25/2012

Republicans rejoice. 2014 gives them plenty more time to further sabotage the economy.

[Sh00Fly]

05:14 PM on 01/25/2012

I posted the link to the Live Ustream coverage when it was occurring.
I hope HPo will post an article with link prior to the actual conference next time.
Here's the link to one of their UStream Channels http://www.ustream.tv/federalreserve

[therainisgone]

05:10 PM on 01/25/2012

for the fed to stay in business all they need is a stack of paper, a bottle of ink and a small can of 3 in 1 oil for the printing press

and a supply of great great grand children

[ssnt]

05:01 PM on 01/25/2012

Cracks me up that this is the most important story of the day and we have three comments.

Libs need to get a clue.

[SisterAnn]

06:28 PM on 01/25/2012

I have posted two more times on here. I don't know why it takes so long to get posted.

[Boston 019]

08:22 PM on 01/25/2012

I wish I could hit favorite again. 1000s of comments on the abortion and gay marriage articles, but the ones that determine the fate of the human race and American liberty get little attention.

[Mafdet]

05:01 PM on 01/25/2012

The nation's second Great Depression is presided over by a Federal Reserve Chairman whose only area of expertise is the nation's first Great Depression. So which is it? Do you have ammunition or tools? Because one destroys and the other builds.

[SisterAnn]

06:05 PM on 01/25/2012

Bernanke is supposed to be an expert on the Great Depression. FDR had this country set up after the Great Depression so there would not be another Great Depression.

It is almost as if they want a depression. They have taken away all of FDR's protections.

Inflation will make savings worthless, but who knows what to do?

At some point the market will have to go up and stay up, if they want customers. I probably will miss the run up again.

Bernanke said something about QE...
They all say there is no inflation, but there is in our area. Or maybe it is that our currency is worth half of what it was, so now we pay twice as much for health care, gas and so forth, but we don't earn twice as much.

It reminds me of groundhog's day, the movie where the guy woke up every morning to the same day. He had to live that day the right way or he would wake up to it every day until he did it right.

I just can't figure out who is the star of this groundhog movie, Bernanke or me. lol It is a comedy.

[Mafdet]

04:44 PM on 01/26/2012

I share every thought you just expressed.

[Chubbster]

04:51 PM on 01/25/2012

Well, out of ammunition that would make a damn bit of positive difference.
It's funny, if you look at Bernanke's long term record he is a disaster.
Sure he can goose stock prices, raise inflation world wide, skyrocket the price of gold but for anyone in the real world all he does is cause harm...except to the banks, his ONLY CONSTITUENTS.

[MikeMenza]

04:43 PM on 01/25/2012

Bernanke said. "I have a job to do and as long as I'm here I will do everything I can to help the Federal Reserve. "and the banksters"

But you sure aren't doing anything to help the USA...

[Boston 019]

08:23 PM on 01/25/2012

The Federal Reserve is not a government agency. They have no Congressional oversight. So he correctly stated that his loyalty is to the Fed.

[SisterAnn]

05:15 AM on 01/26/2012

I did some research several years ago and found a lot of them get government retirement benefits.

It could be like Greenspan who will get a government pension but he also is/was in the Federal Reserve.

[Norma Ward]

04:41 PM on 01/25/2012

Here is a detailed transcript of the last FOMC meeting that Allan Greenspan attended as Chairman of the Fed showing that both he and his successor, Ben Bernanke, totally missed the impending collapse of the American housing market which led directly to the Great Recession:

http://viableopposition.blogspot.com/2012/01/where-fed-went-wrong-or-how-they-missed.html

Oops.

[Boston 019]

08:25 PM on 01/25/2012

Wow... the federal government getting involved in the housing market... that sounded like a great idea at the time, right?

Back in 2003 or so, Paul Klugman nailed it- he said that another bubble would have to be created to replace the Nasdaq bubble. We got a housing bubble, and the Second American Depression.