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In today’s prepared comments to Congress Dr. Bernanke made it clear that QE3 is not on the horizon.  He did, however, maintain an accommodative posture.   The key points from the testimony:

“The target range for the federal funds rate remains at 0 to 1/4 percent, and the forward guidance language in the FOMC policy statement provides an indication of how long the Committee expects that target range to be appropriate.”

“The Committee reviews the size and composition of its securities holdings regularly and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in the context of price stability.”

I take that to mean, we’re still very worried about downside risks to the economy and we’re ready to act, but not seeing any need to act soon.  He appears cautiously optimistic.  This all means QE3 isn’t around the corner which is consistent with the latest CPI data and economic improvement.

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