The dovish message of the Federal Reserve grew a little louder late Tuesday, as current Fed chairman Ben Bernanke said that the government's largesse is likely to continue for some time — even after unemployment rates fall to below 6.5 percent. Per CNBC:
He noted that the fed funds rate can remain near zero 'well after' the unemployment rate hits 6.5 percent and that unemployment targets are thresholds, not triggers. The U.S. unemployment rate is currently at 7.3 percent.
In a speech to the National Economists Club that echoed dovish comments by his nominated successor, Janet Yellen, Bernanke also said that while the economy had made significant progress, it was still far from where officials wanted it to be.
"The FOMC remains committed to maintaining highly accommodative policies for as long as they are needed,'' he said in prepared remarks, referring to the policy-setting Federal Open Market Committee.
The Fed has been buying $85 billion per month of bond assets, including residential mortgage bonds, in an effort to stimulate economic growth by keeping lending rates low. Speculation has been rampant since the middle of the year that the Fed will eventually look to end its purchases, leading to fluctuations in mortgage rates and Treasury rates.
