The Federal Reserve’s monetary stimulus is helping the economy recover but the central bank needs to see further signs of traction before taking its foot off the gas pedal, Fed Chairman Ben Bernanke said on Wednesday.
A decision to scale back the $85 billion in bonds the Fed is buying each month could come at one of the central bank’s “next few meetings” if the economy looked set to maintain momentum, Bernanke told Congress.
But minutes from the Fed’s most recent meeting released on Wednesday showed the bar was still relatively high.
“Many participants indicated that continued (job market) progress, more confidence in the outlook, or diminished downside risks would be required before slowing the pace of purchases,” according to minutes from the April 30-May 1 meeting.
In testimony that showed little immediate desire to retreat from the Fed’s third and latest round of bond buying, Bernanke emphasized the high costs of both unemployment and inflation, which respectively continue to run above and below the Fed’s targets.
The gist of these reviews for several months has been “What we’re doing isn’t really working well but this whole mess is so fragile it may REALLY fall apart if we stop anytime soon.”
And Obamacare hasn’t even had a chance to wreak its havoc yet.
Four more years.