Federal Reserve Chairman Ben Bernanke spooked the markets on Wednesday when he told the Joint Economic Committee of Congress that the Fed could start tapering its quantitative easing (QE) program during one of its next few FOMC meetings depending on economic data.
QE is one of the Fed’s economic stimulus programs, which is intended to lower interest rates through bond purchases.
Bernanke has no shortage of critics.
But UBS’s Paul Donovan is a fan.
“The Fed’s dependence on data flow to determine policy is exactly what a good independent central bank is supposed to do,” writes Donovan today. “Better that than being hostage to the whims of political action (Japan) or inaction (Euro area), which undermines policy independence..”
“The Fed giveth, the Fed taketh away.”