Not much doubt about where rates are going. Also not much doubt that the Fed’s balance sheet will continue to balloon. (And note the emphasis on buying longer-term Treasuries to keep long-term rates down, another unusual move)
WSJ: Federal Reserve Chairman Ben Bernanke signaled Monday that officials will hold nothing back in their support of financial markets and the economy, calling further interest rate cuts from already low levels “certainly feasible.”
In prepared remarks to an economic conference in Texas, Mr. Bernanke also said the Fed’s powers don’t end with the federal funds rate, and its ability to inject liquidity into markets through its balance sheets “remains effective.”
While officials will at some point need to bring short-term interest rates and liquidity back to more sustainable levels, “that is an issue for the future,” Mr. Bernanke said in the text of his remarks to the conference in Austin, Texas.
“For now, the goal of policy must be to support financial markets and the economy,” Mr. Bernanke said. (Read the full text of Bernanke’s remarks.)
Among the Fed’s options, Mr. Bernanke said, are direct purchases of Treasurys and securities issued by government-sponsored enterprises “in substantial quantities” to affect yields, “thus helping to spur aggregate demand.”