Bernanke’s much anticipated speech at The Economic Club of Minnesota doesn’t contain anything new since the Jackson Hole speech. In essence, they’re still concerned about the economic downturn, but not to the extent that they feel compelled to act. In other words, the market’s haven’t thrown a big enough temper tantrum for Bernanke to feel forced into action (action which is unlikely to do much). The relevant section follows:
“Although the FOMC expects a moderate recovery to continue and indeed to strengthen over time, the Committee has responded to recent developments–as I have already noted–by marking down its outlook for economic growth over coming quarters. The Committee also continues to anticipate that inflation will moderate over time, to a rate at or below the 2 percent or a bit less that most FOMC participants consider to be consistent with the Committee’s dual mandate to promote maximum employment and price stability.
Given this outlook, the Committee decided at its August meeting to provide more specific forward guidance about its expectations for the future path of the federal funds rate. In particular, the statement following the meeting indicated that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013. That is, in what the Committee judges to be the most likely scenarios for resource utilization and inflation in the medium term, the target for the federal funds rate would be held at its current low level for at least two more years.
In addition to refining our forward guidance, the Federal Reserve has a range of tools that could be used to provide additional monetary stimulus. We discussed the relative merits and costs of such tools at our August meeting. My FOMC colleagues and I will continue to consider those and other pertinent issues, including, of course, economic and financial developments, at our meeting in September and are prepared to employ these tools as appropriate to promote a stronger economic recovery in a context of price stability.”