From Ben Bernanke’s public appearance last night [source: Reuters] (bold highlights added)
Federal Reserve Chairman Ben Bernanke said on Wednesday the central bank might need to ease monetary policy further if inflation or inflation expectations fall significantly.
In his first public remarks since the Fed launched a fresh measure aimed at keeping down long-term borrowing costs, Bernanke indicated a willingness to push deeper into the realm of unconventional policy if economic growth remains anemic.
"It is something that we're going to be watching very carefully," Bernanke said in response to questions from the audience at a forum sponsored by the Cleveland Fed.
"If inflation falls too low or inflation expectations fall too low, that would be something we have to respond to because we do not want deflation," Bernanke said.
My deciphering or translation of the above: ‘Despite the vocal protestations of my critics, a continuous decline of markets should validate my imposition of QE 3.0, which will absolve my position.’
The above statements serve as more evidence that Mr. Bernanke’s current policy actions appear to be constrained by politics. Global markets have already substantially fallen, with MSCI All- Country World Index of 45 nations breaking into the bear market territory last week, yet Chairman Bernanke’s favorite instrument has been in absentia.
Additionally, these statements can be construed as more indications that markets are being used as negotiation leverage or manipulated for political goals.
Could Mr. Bernanke, then, be wishing for the markets to endure further strains?
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