Bernanke Seeking to Manage Market Expectations

By Joseph Brusuelas, Bloomberg Economist

   Investors may see Federal Reserve Chairman Ben S. Bernanke attempt to conduct a monetary symphony in three parts at this week’s FOMC meeting when he uses his press conference, the update of the summary economic predictions and the policy statement to try to manage market expectations amid renewed volatility.
   Without using the word ‘tapering,’ Bernanke will probably take the opportunity to remind investors that after the first two rounds of central bank asset purchases yields actually declined. Also, given the relative underperformance of the U.S. economy during this recovery, the Fed chairman will likely reiterate that the central bank intends to remain accommodative, holding the policy rate near zero, for quite some time even as the pace of asset purchases inevitably slows.

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