The tone of today’s press conference could be described as skeptical. With many months of seeing the same news come across and not much in the way of economic improvement, people are beginning to wonder if the Fed is really doing as much as they could be doing. As a result, many of the questions from today’s were tough, but true to form the chairman answered them tactfully and knowledgably. In the end, Bernanke defends the Fed’s action, reinforced much of what was already known and did not give too many clear answers about what the FOMC will be doing in the future.
When asked why the fed is not really doing anything, Mr. Bernanke was quick to point out that Operation Twist was a success and that its extension was a substantial move.
There was question on whether or not QE1 and QE2 even had an impact (therefore questioning if QE3 should even be considered). The chairman explained that the first two easings brought about economic support and did a substantial job in staving off deflation.
Since there is an upcoming election, and one of the main focuses in voter’s minds is the economy, the Fed was challenged as to which direction they would take. It was made clear that the Fed is not swayed by politics and retains an objective, non-partisan stance.
There is still a lot of work to be done in Europe, and the Fed is mainly in “consultation mode.” The Fed has no plans to purchase any European debt.
The housing market is a big part of what is holding back the economy. Difficult access to credit is the major issue that is holding consumers back.
When questioned on if the Fed will be able to help out the economy, Mr. Bernanke reminded the press that there are many non-standard policies that they can still implement to help spur economic movement.
While the Fed Chairman did a great job of defending the actions of the FOMC, there really was nothing new to come out of the press conference. Most of what Mr. Bernanke said was a repeat of the recent FOMC Monetary Policy release. The bottom line was that Bernanke saw the recovery as slower than expected, but there were still a few methods that could be implemented to perk it up. Watch the press conference on MSN Money.