Ben S. Bernanke reinforced his standing as the most activist Federal Reserve chairman in history by doing the unexpected: nothing.
The policy-setting Federal Open Market Committee yesterday refrained from reducing the $85 billion pace of its monthly securities buying, sending stocks to record highs and triggering the biggest rally in Treasuries since 2011 as investors repositioned for a more accommodative central bank. Bernanke said the Fed must determine its policies based on “what’s needed for the economy,” even if it surprises markets.
The decision to abstain from tapering bond purchases underscored Bernanke’s willingness to do anything to lower unemployment and pushed back expectations for a tightening of policy, according to Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey. Bernanke said he was concerned that market interest rates, driven higher by his own suggestion he would scale back so-called quantitative easing, would curb growth.
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