STOCK MARKET WATCH -- Friday, 10 February 2012

[Demeter]

8. Bernanke Holds to 2014 Low-Rate Pledge Even as Unemployment Rate Declines

http://www.bloomberg.com/news/2012-02-08/bernanke-holds-to-2014-low-rate-pledge-even-as-unemployment-rate-declines.html

Federal Reserve Chairman Ben S. Bernanke is holding to his pledge to keep borrowing costs close to zero at least through late 2014 even after unemployment unexpectedly fell to a three-year low.

Bernanke told the Senate Budget Committee in Washington yesterday that the decline in the jobless rate to 8.3 percent in January veils weaknesses in the U.S. labor market. Fed officials last month said they didn’t expect such progress until the fourth quarter.

“It is very important to look not just at the unemployment rate, which reflects only people who are actively seeking work,” Bernanke said in response to a lawmaker’s question during his testimony. “There are also a lot of people who are either out of the labor force because they don’t think they can find work” or who have taken part-time jobs.

The comments suggest Bernanke won’t alter his 2014 rate pledge until he sees faster economic growth, strong employment gains over many months or a risk that what he calls “subdued” inflation may speed up, said Dean Maki, chief U.S. economist at Barclays Capital Inc. The Fed chairman has held the benchmark federal funds rate at zero to 0.25 percent since December 2008...

BERNANKE SPEAKS TRUTH? WHAT NEXT?