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In particular, in the statement following our meeting earlier this month, we indicated that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013. That is, in what the Committee judges to be the most likely scenarios for resource utilization and inflation in the medium term, the target for the federal funds rate would be held at its current low levels for at least two more years.
In addition to refining our forward guidance, the Federal Reserve has a range of tools that could be used to provide additional monetary stimulus. We discussed the relative merits and costs of such tools at our August meeting. We will continue to consider those and other pertinent issues, including of course economic and financial developments, at our meeting in September, which has been scheduled for two days (the 20th and the 21st) instead of one to allow a fuller discussion. (Emphasis added.)
Reuters’ word cloud of the speech makes it hard to find the word “inflation.” Take that Rick Perry!
Gold is up 1% right now on the day. The downbeat assessment on the economy is pushing down oil prices. There was even less than I thought in the speech, which will do nothing to help consumer sentiment. Bernanke did signal on fiscal policy and came down decidedly with the more-stimulus crowd:
Although the issue of fiscal sustainability must urgently be addressed, fiscal policymakers should not, as a consequence, disregard the fragility of the current economic recovery.