Eugene David
...The One-Minute Pundit

Wednesday, June 22, 2011

Fed Frets Over U.S. Fiscal Recklessness


With “stock prices (a favorite of Bernanke as rising prices induce the wealth effect) under pressure and commodities hav[ing] sold off,” Bernanke’s more dovish policy approach could spark a “Jackson Hole Moment Part 2.”

Forced to uphold the Fed’s dual mandate of price stability and full employment, Bernanke will have to balance the risks of acting and not acting in the current environment. Specifically regarding the dual mandate, unemployment has ticked up to 9.1% and it’s all but confirmed that growth projections will be lowered. Fate could be twisted the bearded academic’s hand this time: “there is the possibility that Bernanke has a Jackson Hole Moment: Part 2 and conveys a more dovish policy approach relative to April, basically signaling ever so coyly additional bond purchases.”
[Emphasis added]


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