In his speech before the Economic Club of New York yesterday, Fed Chairman Ben Bernanke expressed some conflicting thoughts about dollar policy. He said that the Fed is “attentive to the implications of changes in the value of the dollar.” At the same time, Bernanke reiterated his stance that economic conditions will warrant low levels of the Fed funds rate “for an extended period.” So it appears the Fed will maintain its low interest rate policy, which, in theory, could keep the dollar weak. This seems like a contradiction in terms.
In his energy report today, Phil Flynn agreed, saying that the speech “made it seem like the Fed was unconcerned about the state of the dollar.”
Bernanke also said that jobs are likely to remain scarce, although things appear to be getting worse more slowly. He noted that restricted bank lending and the weak job market were the two principal factors that would restrain the pace of recovery.
Tags: Ben Bernanke, economy, Federal Reserve, U.S. dollar
