Bernanke’s testimony

Bernanke in his speech is saying most of what we already know about the economy and specifies that its the household/spending outlook that is the “important downside risk” which we know is the disease of the credit crisis. He says the unemployment rate will remain elevated even as the economy recovers (we need to generate 125k+ jobs per month to see a reduction). He reiterates his belief that inflation will remain subdued for the next few years. He seems confident on the steps the Fed has taken and the relative calmness (although “conditions remain stressed”) in the capital markets and says the Fed can remove their extraordinary stimulus in a “smooth, timely” fashion in order to avoid inflation. He passes on some words to Congress and the President in saying that they ‘must plan now for restoring fiscal balance.’ He also defends the independence of the Fed. The Q&A is where the drama is, if any.

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