On the heels of his comments on the economy Monday night, Bernanke didn’t reveal anything new on his economic outlook. His cautious optimism hints at a continuation of the Fed’s extraordinarily easy policy with Fed Pres Hoenig the only voting member of the 10 who believes this is bad policy. Part of today’s Bernanke testimony is his comments on the US Federal Budget and saying that it’s on an “unsustainable path” is stating the obvious to all except those in DC. He does say that what Europe is experiencing right now shows the importance of the US government getting its act together. He believes the issues Europe faces right now will likely have only a modest impact on the US IF markets stabilize and the Fed will pay close attention. He said it’s a positive that the US Treasury market is seen as a safe haven as its helped to lower interest rates. What he doesn’t say is that US Treasuries are just a nicer house in a bad neighborhood.
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