Author: David Schwartz J.D. CPA
In an October 14, 2012 address in Tokyo, Fed Chairman Ben Bernanke outlined the Fed's near term economic outlook, and discussed in an international context the basic rationale underlying the Federal Reserve's recent policy decisions. According to Bernanke, the outlook is for the economic recovery to proceed at a moderate pace in coming quarters, with the unemployment rate declining only gradually and inflation running less than 2%. These expectations, however, are colored with significant downside risks including the potential for intensified strains on the economies of EU members, potentially further slowing growth. The Federal Open Market Committee (FOMC) expects to continue to employ some creative monetary policy to promote some easing in financial conditions, instill greater public confidence, and promote more rapid economic growth and faster job gains over coming quarters. Bernanke stressed, however, that monetary policy is not a cure-all. Unconventional monetary policies have risks, and the Fed has approached novel applications of monetary policies with great caution, weighing both domestic and international effects in the long term.