Did Employment Grow in December?
Well ahead of the market open investors are busy thanks to comments from Federal Reserve chairman Ben Bernanke over the weekend.
Noting widespread criticism that the housing bubble was inflated largely as a result of monetary policy that was too accommodative in the early 2000’s, Bernanke provided a synopsis of the arguments and the data, concluding that that policy was appropriate and that counter-arguments are “weak.”
“Economists who have investigated the issue have generally found that, based on historical relationships, only a small portion of the increase in house prices earlier this decade can be attributed to the stance of U.S. monetary policy,” Bernanke said.
“Regulatory and supervisory policies, rather than monetary policies, would have been more effective means of addressing the run-up in house prices . . . Policy during that period–though certainly accommodative–does not appear to have been inappropriate, given the state of the economy and policymakers' medium-term objectives.”
As for looking at current monetary policy, Bernanke’s colleague Donald Kohn addressed that topic over the weekend, maintaining that interest rates will remain low for the near future.
“The FOMC has recently reiterated its expectation that the considerable remaining slack in labor and product markets and subdued trends in inflation and inflation expectations are likely to warrant exceptionally low levels of the federal funds rate for an extended period.”
Kohn also said economic activity will return will be “gradual” and that the drop in the unemployment rate will be “slow.”
Key Data This Week:
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