Bernanke Faces A New Communication Challenge‏

Published 06/17/2013, 08:00 AM
Updated 05/14/2017, 06:45 AM

Once again, Bernanke is likely to stress that first, tapering of QE is not a tightening of monetary policy but rather a scale down of monetary easing and second, that a scale down of QE does not imply that the Fed has moved the timing of its first Fed funds rate hike closer.
The FOMC has two tools available to guide markets in this respect. It can choose to keep the projections on the first Fed funds rate hike unchanged in the summary of economic projections, and Bernanke can repeat the message that the Fed will remain on hold for a long time after it
has ended its asset purchases in his prepared remarks at the press conference. We think the Fed will do both.

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