Bernanke – what was so dovish about his Q&A?
OK, here’s my summary of what I thought was most dovish from Bernanke (by the way, the HUGE, big white candle on EUR/USD is a bit of a giveaway too :-))
- Bernanke said that both sides of the Fed’s mandate are saying that they we need to keep being accommodative
- He recognised that the unemployment rate understates weakness in employment market. This was a good point from Bernanke and emphasises that its not just the unemployment rate that the fed looks at for a guide to the health of the labor market, the unemployment rate is just a broad summary.
- He said that even when the wind back of asset purchases begins the overall thrust of policy is still highly accommodative and rate hikes are not on the near horizon at all
- He noted (again … so many of these things he said he and other Fed officials have already said, he must get tired of having to repeat himself so much) that 6.5% unemployment is a threshold, not a target – and that there wont be automatic rate hikes when unemployment hits 6.5 %
- On inflation he emphasized the importance of the target range, and that the Fed doesnt want inflation too high OR low – that there are substantial costs of deflation. (And, in passing, my favourite line for the whole session – that trying to explain the dangers of low inflation to your uncle is hard. LOLed at that one)
- Said it was transitory factors that have brought inflation so low, and that these will pass (and a bit of hawkishness to round it off)