The press conference has begun.
Bernanke is reviewing the policy statement and the projections.
Nothing big so far, still saying weakness is transitory.
Refresh for the latest…
First question from John Hilsenrath on size of Fed security holdings after QE2.
No decisions yet.
Question: What’s holding the recovery back?
Some is temporary, but some is longer lasting.
Some of these headwinds (housing, deleveraging, balance sheet issues) may be stronger than we thought.
Question from Steve Liesman: What’s your take on Greece?
Bernanke: We did discuss Greece. It’s one of several potential financial risks.
Security purchases has been very successful in defeating deflation risk.
Growth in payrolls has actually picked up.
Question: Should we sharply reduce spending?
No. Sudden austerity wouldn’t be good.
Question: What about inflation targeting?
Bernanke: I’m a big advocate.
Question: What would a default of a European institution mean for the US economy?
Bernanke: It would not be good.
Question about Basel capital requirements..
Question about inflation.
No exciting answer.
There is still a large output gap, and since inflation expectations remain well anchored… it’s reasonable to think that core inflation will fall back to mandate consistent levels.
Question: How long is the extended period?
Answer: We don’t know. At least 2 or 3 meetings.
Question: If unemployment is going to be garbage so long, why NOT take more easing steps?
Answer: “We’re certainly not in any deflation situation.. and not withstanding the disappointing news recently, we’re certainly in a better labour market than they were this year.
Question: Japanese reporter asks Bernanke about past attitudes towards Japan and how he reconciles that with his current view of things, as QE comes to an end.
Answer: It’s widely agreed that we succeeded that we ended that deflation risk.
And it’s over.
For our big takeaway see here.
Update: the Fed just lowered its growth forecast for 2011 and 2012.
Here’s what’s expected for 2011
- GDP 2.7-2.9%
- Unemployment 8.6-8.9%
- PCE Inflation: 2.3%-2.5%
- Core PCE Inflation 1.5-1.8%.
You can download the new forecast here.
At 2:15, Bernanke’s press conference begins.
Original post: Not surprisingly, the Fed’s policy statement didn’t reveal too much new.
The economy is weak, but nobody is telegraphing QE3 (yet), and there’s certainly no plan to tighten anytime soon.
Now we get the the next part of the big day: The Fed’s economic projections and the Bernanke press conference.
At 2 PM we get the economic projections. As a reference, back in April they predicted the following for 2011:
- GDP 3.1-3.3%
- Unemployment 8.4-8.7%
- PCE inflation 2.1-2.8%
- Core PCE inflation of 1.3% to 1.6%.
For 2012 the estimates were:
- GDP 3.5-4.2%
- Unemployment 7.6-7.9%
- PCE inflation 1.2-2.0%
- Core PCE inflation 1.3-1.8%
So, we’ll see where all those numbers settle in.
At the moment, stocks are up just modestly.
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