Federal Reserve Board Chairman Ben Bernanke said during his first press conference on Wednesday that the economic recovery was “proceeding at a moderate pace and overall conditions in the labor market are improving gradually.” He also said the Fed “is looking carefully at inflation.”
Bernanke said that the Fed “will be looking to see if the [economic] recovery is sustainable, as we believe it is.” The economy will continue a “moderate recovery through 2011,” he said, with “some acceleration in growth in 2012 and 2013.” The Federal Reserve Board and Federal Open Market Committee (FOMC) released their economic projections from their April meetings shortly before Bernanke spoke to reporters.
The FOMC said that it would complete its second round of quantitative easing, known as QE2, as scheduled on June 30. The FOMC statement said the purpose of the continued securities purchases was “to promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.” The FOMC also voted unanimously to keep short-term interest rates near zero.
Bernanke said during his press conference that he believed QE2 had been successful in easing financial conditions, but he ruled out a third round of easing, as he said it looked “less attractive” because inflation has risen.
Ian Shepherdson, chief U.S. economist at High Frequency Economics, said after the press conference that while “no huge surprises” were revealed at the event, “the Fed is resolutely determined not to tighten in direct response to the rise in headline inflation due to higher energy and food prices; the [Fed] will only be concerned if medium-term (stressed) inflation expectations rise, triggering faster wage gains.”
The press conference marked the beginning of quarterly press briefings Bernanke said he would hold as a way to “increase transparency.”
Many central banks, Bernanke told reporters, “do use press conferences, and it does provide a chance for the [Fed] chairman to provide additional color and context” to FOMC meeting outcomes. However, “we’re not done,” Bernake said, in seeking “additional steps to provide more transparency” that will ensure accountability and increase public understanding of the Fed’s monetary policy actions.