Bernanke to Concentrate on Jobless Rate
Federal Reserve Chairman Ben S. Bernanke says he'll stoke the economy until the job market recovers “substantially.” That promise may force him to keep buying bonds until the final months of his term ending in January 2014, according economists in a Bloomberg survey.
Sixty-eight percent of 60 economists said the Fed chairman's third round of quantitative easing will last until late next year or beyond. Just 51 percent of them said the strategy will help boost employment, with a median estimate of 116,000 jobs over the course of next year.
The recovery in the labor market is probably going to be more sluggish than the Fed recognizes” said Michael Hanson, senior U.S. economist at Bank of America Corp. in New York and a former Fed economist. He said policy makers have “painted themselves in a bit of a corner, waiting to see a significant improvement in the labor market.”
Bernanke said in August that new bond buying, while spurring growth and generating jobs, may erode confidence the Fed will exit smoothly from record accommodation, including the first two rounds of bond purchases totaling $2.3 trillion. Most surveyed economists believe Bernanke has gone too far with quantitative easing, with 55 percent saying policy is too easy, compared with 48 percent who said so in a Sept. 7-10 survey.
Bernanke and his colleagues on the Federal Open Market Committee resumed a two-day meeting in Washington today and plan to release a statement at about 2:15 p.m. on policy, including their current plan to buy $40 billion in mortgage-backed securities each month for an indefinite period.
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