How should investors react to Ben Bernanke’s much-anticipated speech last Friday at the annual Jackson Hole Symposium of central bankers? Here are key takeaways and, more importantly, what the remarks by the Federal Reserve’s chairman imply for markets.
Perhaps with an eye on protecting his legacy (and responding to political attacks), Mr Bernanke went out of his way to provide a robust defence of the Fed’s unconventional monetary policy. He did so using historical analyses, some preliminary model results and whatever academic work he could find for what is still “unfamiliar territory”.
Mr Bernanke left no doubt that he is willing to continue to press the policy envelope further out – even while acknowledging that “both the benefits and costs of non-traditional monetary policy are uncertain”.