Ben Bernanke, nor any other FOMC chairman, has ever given a regular press conference immediately after a scheduled FOMC meeting. We are taking notes, some will be paraphrased… We will not be regurgitating any of the same basic comments from the FOMC Official Statement issued earlier today as we are looking for new bits and new inferences.

First and foremost, here is the summary of the FOMC rate decision, with no changes to Fed Funds, and the outlook on inflation and the economy in general with that same language of exceptionally low rates for an extended period of time.  Bernanke did just add in at 2:16 PM that the Fed can adjust its holdings of securities as necessary.

The FOMC, or The Bernank!, sees….

2011 GDP now at 3.1-3.3% from 3.4-3.9%…. The FOMC mandate is 1.7-2.0% for a target inflation rate… The current recovery is at a moderate pace and labor continues to improve gradually… A moderate recovery is expected to continue through 2011 and a slight uptick in both 2012 and 2013 with a slight downgrade to the predictions made in January. It is also increasing its inflation expectations a bit (more to follow)… 2011 unemployment forecast is now 8.4-8.7% vs. 8.8-9/0% prior; 2012 expects 7.6-7.9% versus prior 7.6-8.0%; after 2013 unemployment expectation is unchanged at 6.8-7.2%; and long-term the unemployment expectation is now 5.2-5.6% versus a prior estimate of 5% to 6%…. 

The FOMC must meet its dual mandate for the next one year or two years, in the medium-term… It is not required for the Fed to tighten monetary policy at this time (2:25 PM EST)…

NOTE: an “extended period” now appears to mean a couple to several meetings if you read into The Bernank’s comments today.

The FOMC will carefully consider parts of its dual mandate when appropriate…

QUESTION 1… on GDP

Bernanke said he has not seen the number yet but is expecting a relatively weak number at just under 3% (2:27 PM EST)

QUESTION 2… How Soon before withdrawing extraordinary help….

We are looking closely at indicators, looking at job market, looking at inflation as part of the mandate… inflation should come down to a normal level.  As far as the extended period, once the conditions are violated or are moving away, then we will begin to tighten.  This more vague terminology is used because they don’t always know.

QUESTION 3 Steve Lisman of CNBC…. (missed first part) on the dollar and the standard of living

Strong dollar policy continues, keeping inflation low with a stronger economy and maximum employment is the goal…   2:32 PM EST

Another issue brought up was the ‘safe haven effect’ of the US Dollar… The best thing we can do for strong dollar fundamentals is low inflation and a strong economy

QUESTION 4 WSJ… on gas and food prices… Can the Fed or should the Fed do anything about that?

The Bernank! says… gasoline prices have risen and price pressure are a bad development… these make economic development less favorable… drags down purchasing power of households… our interpretation is supply and demand with the demand for commodities very strong (including oil)…. Demand is coming from growth economies… Supply side is facing disruptions from Middle-East and North Africa…. This accounts for almost all of the near-term inflation pressure and there is not much the Fed can do to target gasoline prices and cannot control growth of emerging economies.  2:36 PM EST

Question 5 Bloomberg… recovery won’t be fully established until stronger job creation….

Growth was very moderate when securities purchases began, payrolls have picked up in recent months and unemployment is getting better… it is encouraging but the pace of improvement is slow… we are still about 7+ million jobs short of where we were before the recent mess.   2:38 PM EST

QUESTION 6 FINANCIAL TIMES… inflation remaining stable… Can the Fed curb public inflation expectations?

The Bernank says inflation expectations rise significantly with higher commodity prices but medium term inflation expectations have not moved very much and they want to keep inflation within that mandated range… will communicate to the public…. if inflation persists or begins to get higher, then appropriate action has to be taken…..  2:40 PM EST

QUESTION 7… Young lady… How long will the Fed continue to allow investments

We will complete the program by June… our view is that the end of the program is unlikely to have sweeping effects on the market and the economy… The Fed is trying to telegraph well in advance…. We subscribe to THE STOCK VIEW of securities purchases, not the pace but the size of the portfolio… will continue to reinvest maturing securities… do not expect a major effect…. At some point I expect that an early step would ultimately be to stop reinvesting some or all of maturing securities… but that acts as a form of Fed Tightening, so that decision will be based on the outlook and expectations. 2:44 PM EST

QUESTION 8 (unknown man) How Would the FOMC Cut The Rate of Unemployment?

take all steps beyond what was taken already with monetary policy… have used forward guidance to affect expectations… many rounds of securities purchases… we will have to make judgments about what measures can be taken while keeping in mind the dual-mandate of full employment and inflation…..

QUESTION 9 John with NPR NEWS…. Can you really afford to stop the securities purchases in June?

I am convinced that the securities purchases worked… was similar to ordinary easing of Fed Funds rate… first round was March 2009, then came the significant easing of this program… When I first indicated this step economists updated their forecasts for growth… The conclusion that the second round of securities purchases was ineffective was coming when fears of a double-dip recession and deflation were coming… no panacea… I think it was successful….. The trade-offs are becoming less attractive now as inflationary pressures are a bit higher… 2:50 PM EST

QUESTION 10 from DOW JONES… On oil and inflation… What is the best strategy?

our anticipation is that oil will stabilize or come down and that will bring inflation down to our objectives…. I think inflation expectations will be a key thing we look at…

QUESTION 11… NIGHTLY BUSINESS REPORT (?)….  can the Fed influence long-term unemployment?

Something like 40% of the unemployed have been out of work for over six months and that is troubling.. We saw in Europe in the 1980s and 1990s can lead to long periods of high unemployment…. we hope to bring many of these people back to work … As workers become discouraged and stop, it falls out of the scope of monetary policy…  2:54 PM EST

QUESTION 12 FOX BUSINESS NETWORK… about US going on S&P Credit watch? Is that a worry?

S&P did not offer anything new, but this is hopefully one more incentive for Congress to get the budget and deficit in line… This is unsustainable but has to be solved in long run…

QUESTION 13 (John Berry?)… Congress appears intent on cutting spending significantly could stall recovery.. What can Fed do to address budget cuts?

Addressing the deficit is a top priority and leaders have to address this… not seeing consequences for short-term economic activity…. If the focus is all short-term it can have consequences… so far not seeing fiscal changes impacting…

QUESTION 14… Japanese Newspaper (?)… What is uncertainty risk and impact risk of outside events?

FOMC Minutes in a few weeks will include more detail but FOMC participants do see quite a bit of uncertainty coming from global factors… commodity prices, North Africa, Middle East, if the E.U. situation continues… been speaking with Japanese counter-parts and we are admiring of Japanese courage in the response and a good job from the central bank in Japan to stabilize the local markets…. we believe impact will be short-term… for the U.S. we have noted supply chain disruptions particularly from auto parts… may be some moderate and temporary…. 3:01 PM EST 

QUESTION 15 on keeping inflation expectations low… is this policy acting as a flame for inflation?

It is true we have used extraordinary tools but we are monitoring the state of the economy and the inflation outlook… we will adjust the policy when it is appropriate….. Choosing the appropriate path at the exact right time is difficult but we anticipate we’ll tighten at the right time…. at the same time keeping inflation low and stable

QUESTION 16… AFP… on FOREX rate, would you change policy if threat grows?

We continue t believe in a strong dollar, we’ll keep inflation low and foster economic growth, those will create appropriate and healthy levels for the US Dollar…… 3:05 PM EST

QUESTION 17….. Anthony Mason at CBS… Talk about your decision to hold this historic news conference

We have been looking for ways to make more transparency for years… As recently as 1994 the FOMC did not even tell the public about its decision to change interest rates…. We have substantial means to communicate with speeches and to garner transparency… This offers additional color and context as a natural next step… we are not done at being more transparent and we will do more…. need the public and markets to understand what we are doing…. 3:08 PM EST….

QUESTION 18….. When you have a crisis it takes longer to recover… Will it be too slow?

Recoveries following crisis tend to be very slow recoveries… other aspects would be credit impact on housing… policy responses in past might not have been adequate and might not have been sufficient… Bernanke admits it is a slow recovery and was triggered by the housing market and it remains very weak today… now we are seeing high oil prices and other factors holding the recovery back…. hard to blame America for wanting better economy and why they are impatient… While the recovery looks to remain moderate, I do think the pace will pick up and in long-run the US will return to one of the best economies in the world again…    3:11 PM EST

The Bernank ends… THANK YOU VERY MUCH AND THANK YOU FOR COMING!!!!! 3:12 PM EST

AT 3:22 PM EST THE MARKETS ARE AS FOLLOWS:
DJIA…..  12,666.17 (+70.80; +0.56%)
NASDAQ 2,863.19 (+15.65; +0.55%)
S&P500… 1,352.78 (+5.54; +0.41%)
30YR TBOND 4.463% (+0.064)
10YR TNOTE 3.368% (+0.048)
VIX 15.44 (-0.18; -1.15%)
EUR/USD 1.4740 (+0.0091)
USD/JPY 82.1850 (+0.5800)
GBP/USD 1.6603 (+0.0118)

JON C. OGG

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