Bernanke Speals on Growth & Inflation in QE/QE2

Federal Reserve Chairman Ben Bernanke is keeping quantitative easing alive despite saying action is or isn’t being taken.  The speech is from a monetary policy conference held by the Federal Reserve Bank of Boston.  With all the talk of quantitative easing (Qe or QE2) and slower growth and slower inflation, Bernanke seems to paint a picture of the criteria.

On growth, Bernanke said, “Overall economic growth has been proceeding at a pace that is less vigorous than we would like.”   Bernenanke did offer up that additional accommodation is available if needed for recovery and inflation targets.

The initial take is that if things stay the same or get worse then quantitative easing would come.  The mandated target for inflation is apparently 2% or a tad less.

QE (or QE2) would likely be the purchase of long-dated maturity assets and most likely much in the Treasury notes and bonds.  Uncle Sam’s balance sheet will get to grow from bloated to stuffed.

The talk of a disappointment with employment would implying that there are real concerns that the unemployment rate will remain high and decline only slowly.

Bernanke’s full speech is available here.

JON C. OGG