FOMC Press Conference June 22, 2011 | Summary and Q&A

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June 22, 2011
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Federal Reserve
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FOMC Press Conference June 22, 2011

TL;DR

Federal Reserve Chairman, Ben Bernanke, discusses the policy decision to keep the target range for the federal funds rate at 0 to ¼ percent and the completion of the planned purchases of $600 billion of longer-term Treasury securities.

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Key Insights

  • ☠️ The Federal Reserve will maintain an accommodative monetary policy due to the elevated unemployment rate and subdued inflation outlook.
  • 👾 The economic recovery is proceeding at a moderate pace, albeit slower than expected, partly due to temporary factors.
  • ☠️ Projections for economic growth, unemployment rate, and inflation rate have been submitted by FOMC participants.
  • 🍉 Fiscal policy should focus on long-term deficit reduction, while avoiding sharp fiscal consolidation in the near term to support economic recovery.

Transcript

CHAIRMAN BERNANKE. Good afternoon and welcome. In my opening remarks today, I'll briefly review today's policy decision. And I'll place the decision in the context of our economic projections and our policy strategy. I'll then be glad to take your questions. Throughout today's briefing, my goal will be to reflect the consensus of the Committee whil... Read More

Questions & Answers

Q: Will the Federal Reserve maintain its securities holdings at a high level for an extended period?

The Federal Reserve has not made any commitment regarding maintaining securities holdings at a high level. The decision to exit from current policies will be based on the economic outlook.

Q: Why give guidance on one policy tool but not another?

The Federal Reserve has not given specific guidance on the timing of reducing its securities holdings. The decision will depend on the outlook and the appropriate time to take that step.

Q: Why has the economic recovery been slower than expected?

The slower pace of growth is partly due to temporary factors such as higher food and energy prices and disruptions to global supply chains after the earthquake in Japan. However, some moderation in gasoline prices is expected and the effects of the Japanese disaster are likely to dissipate in the coming months.

Q: Has there been any discussion about further easing in response to the recent slowdown?

The Federal Reserve has not taken any action at this time. The current outlook is different from last year, with inflation above target and the labor market showing improvement. The Federal Reserve will continue to monitor the economy and act as needed.

Summary & Key Takeaways

  • The Federal Reserve will keep the target range for the federal funds rate at 0 to ¼ percent.

  • The planned purchases of $600 billion in Treasury securities will be completed by the end of the month.

  • Projections for economic growth, the unemployment rate, and inflation rate have been submitted by FOMC participants.

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