Bernanke may explain Fed exit strategy
Federal Reserve Chairman Ben S. Bernanke will report to Congress next week, and will most likely show how the central bank will exit the biggest monetary expansion in history. Over the past year the Federal Reserve has poured USD1 trillion into the banking system through bond purchases and emergency loans. The Fed's attempt to revive the economy is also forcing them to reassure investors that inflation will not exceed forecasts once the recession ends.
The Fed will speak with more than one voice next week, and will be a good opportunity to articulate an exit strategy from the consensus view. The Federal Open Market Committee will release updated economic forecasts on July 15, with their long-run forecast for price increases of 1.7% to 2%.
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