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Ben Bernanke's press conference - as it happened

Ben Bernanke, chairman of the US Federal Reserve, held his first ever live press conference to explain monetary policy
Ben Bernanke gives press conference
Ben Bernanke takes questions during a Federal Reserve news conference on quantitative easing. Photograph: Brendan Smialowski/Getty Images

2pm ET: Welcome to live coverage of an unusual event: for the first time the chairman of the US Federal reserve, Ben Bernanke, holds a press conference to explain the Fed's interest rate setting decisions and to explain to outlook for the US economy and its monetary policy.

The press conference kicks off at 2.15pm ET, and you can follow it on streaming video through this link – and the Guardian's analysis right here.

For background, here's how the Financial Times's Lex column [subscription required] reads today's historic press conference:

Longer term, however, conferences should strengthen the chairman's control over the Fed's message. Of late, Fedspeak has come largely from hawkish regional governors. This obscures Mr Bernanke's feat at the last meeting in mustering unanimous support for a highly controversial policy. He is still guiding the Fed. Now he will have ample opportunity to demonstrate this, and lay out his case.

2.10pm ET: Here's how the Fed explains today's event:



2.15pm ET: And right on time, Chairman Bernanke takes the stage and starts speaking from his prepared text.

Included in this nugget on the outlook for jobs:

To foster maximum employment the committee sets policy to try to achieve sufficient economic growth to return the unemployment rate over time to its long-term normal level.

At 8.8% the current unemployment rate is elevated relative to that level and progress towards more normal levels of unemployment seems likely to be slow.

The substantial ongoing slack in the labour market and the relatively slow pace of improvement remain important reasons that the committee continues to maintain a highly accommodative monetary policy.

Alongside Bernanke's press conference, the Federal Open Market Committee has issued its latest announcement regarding US interest rates:


The upshot to all this is that the FOMC is leaving interest rates unchanged:

The Committee will maintain the target range for the federal funds rate at 0 to 0.25 per cent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.

2.25pm ET: Cracking stuff so far, assuming you have a PhD in macroeconomics from a decent university. If you don't, it's slightly on the dry side.

2.28pm ET: Not a huge PR success so far, based on this tweet from uber-blogger Felix Salmon of Reuters.

This is the weirdest mix of patronizing wonkishness #fedpresserless than a minute ago via TweetDeck Favorite Retweet Reply

Still, it's early days. I think it might have helped if Bernanke had provided a simultaneous translation from Latin.

2.30pm ET: Critics say Fed policy has driven down the value of the US dollar. What does Mr Bernanke have to say to those critics? (That's asked by someone called Steve.)

Bernanke doesn't really answer the question, and basically says that if the US economy is strong then the US dollar will be strong. Which is true. Low inflation and a strong economy, that's the ticket.

2.33pm ET: What can or should the Fed do able Americans being upset about high gas and food prices, wonders the Wall Street Journal.

"Gas is of course a necessity, people need to drive to work," notes Bernanke. Well, I walked to work this morning, but his broader point is accurate.


After all, the Fed can't create more oil. We don't control the growth rates of emerging market economies. What we can do is basically try to keep higher gas prices from passing into other prices and wages throughout the economy and creating a broader inflation which will be much more difficult to extinguish.

Again our view is that most likely – of course we didn't know for sure but we will be watching carefully – is that gas prices will not continue to rise at the recent pace. As they stabilize or even come down if the situation stabilizes in the Middle East, that will provide relief on the inflation front, but we have to watch it very carefully.

2.37pm ET: For how long will US economic growth and growth in the labour market continue to be moderate, asks a polite man from Bloomberg.

"The pace of improvement is still quite slow, we are digging ourselves out of quite a big hole," Bernanke says. Basically, a while yet.

2.38pm ET: At last a lovely British accent, via a question from Robin Harding of the FT, looking like a young Michael Caine. The question was about inflation expectations.

The answer is so fascinating that words alone can't convey it.

2.43pm ET: And now a question about the end of quantitative easing. Something something something.

2.44pm: A silly question from a nameless interlocator, asking what can the Fed do about providing more jobs. Oh god, it was from the New York Times. Really.

"Clearly it is the case that we have done extraordinary things" to get the economy moving, Bernanke argues.

And now a question about the ineffectiveness of the second round of quantitative easing – in which the Fed attempted to push on a piece of string using a wodge of cash.

Bernanke unsurprisingly thinks that the policy he piloted was effective. It wasn't going to be a panacea, Bernanke says:

We were very clear from the beginning while we thought this was an important step and that it was at an important time when we were all worried about a double dip and we were worried about deflation, we were very clear that this was not going to be a panacea. That it was only going to turn the economy in the right direction and indeed we published some analytics which gave job creation numbers which were significant, but not, certainly not enough to completely solve the enormous jobs problem that we have.

So again, relative to what we expected, anticipated, I think the program was successful. Why not do more? Again, this was similar to the question I received earlier. The trade-offs are getting less attractive at point. Inflation has gotten higher. Inflation expectations are a bit higher.

It is not clear that we can get substantial improvements in payrolls without some additional inflation risk. In my view if we are going to have success in creating a long-run sustainable recovery with lots of job growth, we have to keep inflation under control.

We have to look at both parts of the mandate as we choose policy.

Now the housing market ... that is something the Fed can do something about.

2.51pm: Why are reporters asking if the Fed can do anything about long-term unemployment?

Is it out of the scope of what the Fed can do? "We don't have any tools for targeting long term unemployment specifically," replies Bernanke.

Hello? Is anyone with a clue going to ask about house prices?

2.54pm ET: Interesting question from Fox Business News about the S&P outlook revision of US sovereign debt last week:

Well, in one sense S&P's action didn't really tell us anything. Anybody who read a newspaper knows that the United States has a very serious long-term fiscal problem.

That being said I'm hopeful that this event will provide at least one more incentive for Congress and the administration to address this problem. I think it's the most important economic problem at least in the longer term that the United States faces.


It is encouraging that we are seeing efforts on both sides of the aisle to think about this issue from a long run perspective. It is not a problem that can be solved by making the case only for the next six months. It's really a long-run issue.

2.58pm: A question about the global economy. "The central bank of Japan has done a good job," says Bernanke – the question came from a reporter for Asahi Shimbun.

3.02pm ET: I don't know about Ben Bernanke but this live press conference makes me think American economics journalists aren't coping with it too well.

3.04pm ET: AFP reporter asks smart question on what the Fed's going to do if the dollar will continue to sink like a stone (this is the "euro revenge" question) as overseas investors flee:

Our view is that the best thing we can do for the dollar is first to keep the purchasing power of the dollar strong by keeping inflation low and by creating a stronger economy through policies which support the recovery and cause more capital inflows to the United States. Those are the kinds of policies that in the mean time will create the conditions for an appropriate and healthy level of the dollar.

So I don't think I really want to address a hypothetical which I really don't anticipate. I think the policies that we are taking not with standing short-term fluctuations will lead to a strong and stable dollar in the medium term.

Good qu from AFP. Took a long time to get round to the issue of everyone abroad hates the Fed for creating hot money and weakening dollar.less than a minute ago via web Favorite Retweet Reply

The FT's Alan Beattie tweets.

3.06pm ET: And now the favourite question of American journalists: the meta-question. Why did Bernanke decide to hold this press conference, asks a man from CBS.

3.10pm ET: The next question begins with the questioner announcing that he once wrote a book. For shame, sir. What is this, Oprah?

3.11pm ET: Bernanke himself mentions the housing market as something bad happening to the US economy.

3.13pm: And that's it! "Thank you very much, and thank you for coming," says Bernanke.

Well, he'll be happy with that. I haven't heard a more ineffectual bunch of questions since Egypt's state television had a no-holds-barred Q&A with Gamal Mubarak.

Seriously, not a single question about the housing market and its influence on monetary policy? The day the governor of the Bank of England ever escapes from a monetary policy press conference without a question about house prices will be a very frosty one in Hell.

3.23pm ET: Paul Krugman is happy with Bernanke's replies about what the Fed can do regarding high unemployment:

So Bernanke did get asked why, given low inflation and high unemployment, the Fed isn't doing more. And his answer was disheartening.

Krugman's conclusion is that the Fed should be undertaking another round of quantitative easing.

This is partly a misunderstanding of what this press conference was about. Bernanke isn't speaking for himself, he's speaking on behalf of the FOMC.

Bernanke also has to be very wary about how his remarks would be intrepreted, especially in the light of rising inflation expectations among US consumers.

So his reply to one question was both cautious and sensible, exactly what you'd expect in the circumstances:

Well, we view our monetary policies as being not that different from ordinary monetary policy. It's true that we used some different tools, but those tools are operating through financial conditions and we have a lot of experience understanding how financial conditions change, interest rates changes in stock rates, so on, how they affect the economy, growth, et cetera.

We are monitoring the state of the economy, watching the evolving outlook and our intention, as is always the case, is to tighten policy at the appropriate time to ensure that inflation remains well controlled; that we meet that part of our mandate while doing the best we can to ensure also that we have a stable economy and a sustainable recovery in the labor market.

So the problem is the same one that central banks always face, which is choosing the appropriate path of tightening at the appropriate stage of the recovery. It's difficult to get it exactly right, but we have a lot of experience in terms of what are the considerations and the economics that underlie those decisions.

So we anticipate that we will tighten it at the right time and that we will there by allow the recovery to continue and allow the economy to return to a more normal configuration, at the same time keeping inflation low and stable.

The difference between the FOMC and Krugman, it appears, is that the Fed thinks the economic recovery is stronger than Krugman does.

4pm ET: The FT's Robin Harding files his take [paywall] on today's Bernanke-athon:

Facing questions from reporters at the first-ever regularly scheduled Fed press briefing, Mr Bernanke sought to explain and defend the FOMC's monetary policy decisions amid criticism from the right that easy money is stoking inflation and from the left that it is not aggressive enough in tackling the high US unemployment rate.

On inflation, Mr Bernanke said the current increase driven by higher petrol prices was likely to be temporary but that "there was no substitute for action and we would have to respond" in the event of a spike in inflation expectations.

He also sought to reassure that the Fed was not deliberately keeping the value of the dollar low.

"The Fed believes that a strong and stable dollar is in America's best interests and in the interests of the global economy," he said.

4.06pm ET: Here's the Associated Press's take:

In his appearance, Bernanke appeared relaxed with reporters, projecting a calming presence and saying nothing that might rattle investors.

He sketched a picture of an economy that is growing steadily but remains weighed down by a prolonged period of high unemployment. He acknowledged the pain unemployment is causing, noting that around 45% of the unemployed have been without a job for six months or longer.

"We know the consequences of that can be very distressing because people who are out of work for a long time, their skills tend to atrophy," Bernanke said.

Stocks rose after Bernanke said he expects the economy to continue growing through next year and 2013. The Dow Jones industrial average, which was up about 50 points when Bernanke began speaking, gained another 50 points half an hour before the market closed.

4.18pm: So what have we learned today? Well, I learned that live blogging a press conference on monetary policy is quite difficult because of the complexity of the topics involved, which don't really lend themselves to rapid-fire blogging. But more importantly, Bernanke did a pretty good job.

The first rule of Fed press conference is that you don't want to say anything that will roil the markets or your colleagues. Only secondarily do you use it as a forum to explain the central bank's work.

It wasn't Bernanke's fault that many of the questions were simplistic and repetitive, he could only work with what he was given to answer.

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