Last week, the Federal Reserve’s quantitative easing was about to undergo some quantitative adjustment. At least that was the take-away from the minutes of the Jan. 29-30 meeting, suggesting that Fed policy makers were starting to view the costs of long-term asset purchases as outweighing the benefits.
Chairman Ben Bernanke disabused us of that notion this week when he delivered the Fed’s semiannual monetary policy report to Congress.
“We do not see the potential costs of the increased risk- taking in some financial markets as outweighing the benefits of promoting a stronger economic recovery and more-rapid job creation,” Bernanke said in prepared testimony. The Fed will continue its $85-billion-a-month asset purchases, he said, “until it observes a substantial improvement in the outlook for the labor market in a context of price stability.”
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