Federal Reserve Chairman Ben Bernanke made clear on Wednesday there won't be any new moves to spur economic growth from the nation's central bank any time soon but he also indicated it will likely be several more months before the Fed begins to tighten monetary policy.
At his second news conference, Bernanke said the Fed will continue to “monitor the economy, revise our outlook … and make a judgment based on the incoming data.”
Earlier, the Federal Open Market Committee said it will keep its federal funds rate low for an extended period and will maintain its target federal funds rate range at zero to 0.25 percent.
“The reason we use terms like ‘extended period’ is not to be intentionally opaque," Bernanke insisted. "The reason is we don’t know exactly how long” they will be needed.
Asked if the FOMC has a statistical trigger that would begin the exit process, he said it would be impossible to create one given the independent views of the committee’s 17 members.
Bernanke did say the FOMC is at least two to three meetings away from taking further action—and he said it could be “significantly longer.” The first step in the exit process will be allowing the Fed’s portfolio to run off rather than reinvesting it, he added.
Last August, when the second round of quantitative easing was announced, he said, the situation was quite different from today. “We were essentially missing significantly on both sides of our mandate [to foster maximum employment and price stability].” Now, he said, we’re closer to the two objectives.
Bernanke also touched on the Greek debt crisis, maintaining the Fed has been “very assiduous” in assessing the risk of U.S. banks’ direct exposure to the crisis, which is “pretty small.” But he did not rule out the possibility of a European crisis roiling international markets and having a “significant” impact on the U.S. economy.