Fed Chairman Ben Bernanke’s speech to the Economic Club of Minnesota was long on theory and short on details. Still, Bernanke made one thing clear: the central bank is revving up to ease monetary policy further. Most analysts are looking for some sort of effort to push down long-term rates at the September meeting. While Bernanke did not offer any further guidance on method, he did present a very distinctive sense of direction.
A renewed focus on growth ratcheted the Fed chief’s tone up a notch from his remarks at Jackson Hole:
The Federal Reserve will certainly do all that it can to help restore high rates of growth and employment in a context of price stability.
Bernanke also appeared keen to assuage the concerns of more hawkish Fed members.
We see little indication that the higher rate of inflation experienced so far this year has become ingrained in the economy.