This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Bernanke Will Likely Be Pressed On Fed Bond Buying

By MARTIN CRUTSINGER

WASHINGTON (AP) â¿¿ Chairman Ben Bernanke will be pressed to clarify the Federal Reserve's approach to the still-sluggish U.S. economy when he testifies to Congress this week.

Bernanke will give his semiannual report to the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday.

Lawmakers will likely question the chairman about the future of the Fed's bond buying program, his view of the economy and his concerns about the budget impasse between Congress and the Obama administration.

Here are some issues Bernanke will likely face and his possible responses:

Q: The Federal Reserve announced in December that it planned to buy Treasurys and mortgage bonds at a rate of $85 billion a month. It's said it plans to keep buying bonds until the job market improves "substantially." But the minutes of the Fed's January meeting showed that several officials worried that the bond purchases could eventually escalate inflation, unsettle investors or cause the Fed to absorb losses once it begins selling its investments. There's clearly division within the Fed's policy committee. Can you explain the Fed's thinking?

A: Bernanke said at a global finance meeting this month that the U.S. economy was recovering. But he added that with unemployment at 7.9 percent, "we are still far from healthy, vibrant conditions." That was seen as a sign that he's still comfortable with the pace of the bond purchases. Still, Bernanke might address the worries of some Fed policymakers. If he signals agreement with them, it could suggest that the Fed may scale back its purchases from $85 billion a month sometime this year. Many analysts think he won't dismiss the concerns but will seek to minimize them. For example, he may say there's no evidence inflation is getting out of hand. He's also likely to repeat that in determining the size of future bond purchases, the Fed will balance the benefits of further purchases against the risks. The bond purchases are intended to keep long-term interest rates low and encourage borrowing and spending.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs