Federal Reserve Chairman Ben Bernanke indicated Tuesday that the U.S. central bank would like to move away from using its balance sheet to help the economy and focus more on “forward guidance” about keeping short-term rates low, but the timing of this shift remains an open question.
In a lengthy speech about Fed communication to the National Economists Club, Bernanke said the timing of the Fed’s tapering of monetary stimulus still depends on further improvement in employment data and a pickup in inflation toward the central bank’s 2% target.
Fed officials still expect “that labor market conditions will continue to improve and that inflation will move toward the 2% objective over the medium term. If these views are supported by incoming information, the Fed will likely begin to moderate the pace of purchases,” Bernanke said.
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