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Ben Bernanke Explains QE4 – Live Blog

After the Fed announced QE4 and new guidance for keeping low rates, Ben Bernanke will meet the press and provide some explanations.

Follow the live blog of Bernanke’s presser.

Update:  Gold Could Go Much Higher – Elliott Wave Analysis

19:00 Fed publishes economic forecasts – unemployment projections drop — more details coming.

19:03 GMT Press conference begins at 19:15 – All times are GMT.

19:05 EUR/USD is trading at 1.3085, USD/JPY at 83.17. You can watch the press conference here.

19:09 More details about Fed forecasts: unemployment rate in 2013: 7.4% to 7.7%, compared with 7.6% to 7.9%. The current unemployment rate is 7.7%.

19:10 GDP growth targets widened from 2.5-3% to 2.3-3%. PCE Inflation widened from 1.6-2% to 1.3-2%. Core PCE lowered from 1.7-2% to 1.6-1.9%.

19:13 Was the fiscal cliff taken into account? This will probably be asked by the reporters.

19:15 Press conference begins.

19:15 Bernanke says unemployment remains high, and that many have a part time job or have lost faith. There is a huge waste.

19:16 Inflation remains tame. Highly accomodative policy continues.

19:17 Committee seeks lower rates in its QE programs.

19:17 Bernanke says that there are no dates.

19:17 QE to continue until situation improves. This includes the unemployment rate, labor force participation that are all taken into account.

19:18 Bond buying will be flexible.

19:19 Qualitative guidance is better at this time. Bernanke quotes the guidance from the statement.

19:20  Accommodation  will continue as long as needed. This makes policy more transparent.

19:22 Bernanke reiterates commitment to Fed goals. “Monetary policy not on auto-pilot”.

19:23  Fed could leave rates low even if unemployment rate falls under 6.5%

19:24 Bernanke lays out all the conditions for moving the rates: for example: drop in unemployment has to be sustainable, inflation trend and not current inflation will be looked at.

19:25 Also other employment figures will be examined.

19:26 We will not derail the economic recovery.

19:27 Questions begin: asset purchases are a less understood tool…

19:28 Rate increases are well understood.

19:29 The change in guidance doesn’t change the expectations. Going forward, we will “drop the date”.

19:30 Tying the policy to goals will help the public and financial markets.

19:30 “We had a substantial discussion” about changing the guidance.

19:31 Bernanke reiterates transparency cause in guidance change.

19:31 Inflation expectations are low. We are trying to clarify the connection between policy and targets.

19:32 The fiscal cliff is having effects on the economy.

19:34 We are assuming that the fiscal cliff will be resolved.

19:35 Q: Is this an additional stimulus? No, this is a continuation of what we said in September.

19:36 QE4: We have announced an initial amount, and we are ready to change that.

19:37 Policy is prone to changes…

19:38 Fiscal cliff will undoubtedly have adverse on the economy, and we can not offset that.

19:39 Regarding the terminology, Bernanke doesn’t regret coining the term, as this is a big issue. He also mentions low business sentiment, and connects it to the cliff.

19:40 Also a short term drop off the cliff would be bad for the economy.

19:42 About economic projections – long term forecasts give us some time.

19:42 No rapid increase in the economy – we will take a balanced approach.

19:43 Some increase in our balance sheet is consistent with our policy. Nothing will change the “time to exit”.

19:44 I’m hoping that Congress will do the right thing on the fiscal cliff.

19:45 Congress also needs to make a framework for a long term solution.

19:46 The inflation limit is for “protection”. The nubmers were based on the Fed’s models.

19:47 Emotional question: what happens to regular people if the US goes off the cliff? What should people do?

19:48 Bernanke: the part where I come from has been “economically challenged”. We are trying to help people everywhere.

19:49 Bernanke mentions foreclosure rate in addition to the unemployment rate.

19:50 Important that politicians come to an agreement.

19:52 Main reason is to give markets and people more transparency about policy.

19:52 Is the Fed policy following a path for raising the rates only in 2016? Bernanke repeats key points in the statement.

19:54 We prefer having credible forecasts, and that’s why we keep policy transparent.

19:55 I think we can manage the credibility issue. The best thing is the collective wisdom of the Committee.

19:56 We expressed our dissatisfaction of the labor market in September.

19:58 Is the message: we are doing what we can? Bernanke refers to different views on the committee.

20:00 What about more stimulus? Bernanke refuses to intervene in politics.

20:01  Bernanke hints that he wants more stimulus, given a long term path for the longer term debt.

20:02 We missed growth forecasts and underestimated the recession.

20:04  Economic forecasting beyond a few quarters is hard…

20:05 The central bank cannot control unemployment in the long run.

20:06 The long term unemployment rate is made by many other things and not monetary policy.

20:07 Normal unemployment rate is between 5% and 6%.

20:10 Bernanke discusses transparency. In the meantime, EUR/USD is sliding under 1.3070.

20:12: Q: Can the Fed run out of ammunition? A: We can always innovate more. We should be more proactive now, when we have the ability.

20:14 Question about the Volcker rule. A lot of work to do…

20:15 Political question from Fox News about future work as Chairman. No real answer from Bernanke.

20:17 Bernanke discusses changes in the participation rate – discouraged workers.

20:20 “I hope that markets won’t have to tank”.

19:21 Bernanke is analyzing the “complacent” market reaction to the fiscal cliff.

20:23 Question about the Fed credibility, and hint that the Fed is financing the government and debasing the dollar.

20:25 “The credibility has been good”.

20:26 AS a part of GDP, QE is not that big, and accommodation is necessary, not meant for fiscal policy.

20:27 EUR/USD continues falling, to 1.3063 now.

20:27 Q:Is the MBS effort not passed on to consumers? A: Our analysis suggests it takes time. We don’t expect a full passage.

20:28 Since September, mortgage rates have been falling. Other things are happening in the economy.

20:30 Most of the declines find their way to mortgage customers.

20:31 Press conference ends.


The Fed will now buy $40 billion worth of MBS (QE3) each month, and $45 billion in treasuries (QE4). Operation Twist has ended.

The Fed also set guidance for changing the interest rate: an unemployment rate of 6.5% as long as inflation expectations remain under 2.5% in the next one or two years. The details are a big vague.

Here are  4 Reasons Why Fed Decision is Extremely Dovish – High Pressure on Dollar

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.