Friday, August 26, 2011

A few articles on Bernanke's Speech

by Bill McBride on 8/26/2011 09:46:00 PM

• From Jon Hilsenrath at the WSJ: Speech Hints at Options for Fed

The next big moment comes on Sept. [20 and 21] when Fed policy makers meet in Washington in a session, Mr. Bernanke disclosed Friday, that has been expanded to two days from one "to allow a fuller discussion" of the options.
...
The Fed chairman, who was appointed by a Republican and reappointed by a Democrat, aimed his sharpest remarks at U.S. lawmakers and the White House, scolding them for a divisive debate about raising the federal debt limit earlier this month that, he said, "disrupted financial markets and probably the economy as well."
• From Binyamin Appelbaum at the NY Times: Bernanke Blames Politics for Financial Upheaval
Mr. Bernanke said he remained optimistic about future growth — he gave no indication that the Fed would increase its economic aid programs, though he said the central bank’s policy-making board would revisit the issue at a scheduled meeting in September — but he warned that the government had emerged as perhaps the greatest threat to recovery.
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“The country would be well served by a better process for making fiscal decisions,” he said.
• From Neil Irwin at the WaPo: Fed chief scolds Congress on debt-ceiling showdown
Federal Reserve Chairman Ben S. Bernanke chided Congress on Friday for its contentious approach to the national debt, saying the brinksmanship displayed by lawmakers could endanger the U.S. economy.
• My earlier post: Analysis: Bernanke highlights September FOMC meeting, Suggests more Fiscal Stimulus

I think it is quite clear the debt ceiling debate disrupted the economy. The key is the September meeting has been expanded to two days to allow for a "fuller discussion" of policy options - and the FOMC will be watching the incoming data over the next few weeks to see if the economy is bouncing back a little for the debate induced slowdown.