Sometimes it is hard to parse what government officials really mean when they talk about the U.S. economy. Some suggest that former Federal Reserve Chairman Alan Greenspan made a living off mixed messages.
Current Chairman Ben Bernanke might be in the same category, as his comments after yesterday’s Federal Open Market Committee meeting appeared to be, well, contradictory, at least according to quotes found in Forbes.
For example, while suggesting that additional monetary easing (QE3) “remains very much on the table” if the economy lapses, Bernanke rejected any suggestions that might help to lower the unemployement rate, which may include additional quantitative easing.
The FOMC’s official policy statement came with an indication that the Fed remains on hold on the policy front, yet Bernanke told reporters that while any additional QE could work against the economy, its use is still on the table.
Markets both yesterday and today were still trying to digest the details of the FOMC meeting minutes, and square the information with Bernanke’s comments.
Bernanke got visibly annoyed when a reporter asked if his views of holding back on additional monetary easing was contradictory to his suggestion when the Bank of Japan was trying to fight Japanese deflation during the “lost decade” that BoJ should use every tool available. Bernanke claimed the situations were different, as Japan was fighting a deflationary battle, while the U.S. economy is growing at the Fed’s targeted 2%.
Of course, it remains to be seen how Bernanke and the Fed will respond as the year goes on and the economy takes its course, particularly in a Presidential election year.
It’s virtually a certainty that the meaning of any pronouncements will be well parsed and scrutinized.