June 19 - The Fed says it will moderate the pace of its asset purchases later this year- if the economy improves as it expects. Bobbi Rebell reports.
At a press conference following the latest Federal Open Market Committee meeting Fed Chairman Ben Bernanke - under pressure to set a date for tapering the Fed's aggressive asset purchases- and with a newly optimistic economic forecast- penciled it in on the calendar: SOUNDBITE: BEN BERNANKE, CHAIRMAN. U.S. FEDERAL RESERVE (ENGLISH) SAYING: "If the incoming data are broadly consistent with this forecast, the committee currently anticipates that it would be appropriate to moderate the pace of purchases later this year. And if the subsequent data remain broadly aligned with our current expectations for the economy we would continue to reduce the pace of purchases in measured steps through the first half of next year ending purchases around mid-year. " Penciled being the key. He keeps his options open- making it clear that if the economy does not improve according to the Fed's optimistic forecast- he can erase the date. Decision Economics' Cary Leahey: SOUNDBITE: CARY LEAHEY, ECONOMIST, DECISION ECONOMICS (ENGLISH) SAYING: "Bernanke in the press conference put a time stamp on tapering. What he said is he expected some moderate reduction in the amount of monthly asset purchases from $85 billion. Probably a guestimate down towards maybe $60 or 65 billion by the end of the year. And he said we might even turn it all off by the middle of next year. The key phrase was he said it was dependent on their forecast, and their forecast is much more optimistic than the consensus. " The markets fell on the news- giving back some of the gains made over the past couple of days. Bernanke also addressed the issue of rising mortgage rates- and the fear that could hurt the recovering housing market. SOUNDBITE: BEN BERNANKE, CHAIRMAN. U.S. FEDERAL RESERVE (ENGLISH) SAYING: "As far as housing market is concerned, we are going to want to watch that but one important difference now is that people are more optimistic about housing. They expect house prices to continue to rise. We see that for example in the survey question in the Michigan survey- and that compensates to some extent for a slightly higher mortgage rate. And in fact, in terms of monthly payments on a house the change in mortgage rates we've seen so far is not all that dramatic." When Bernanke was asked about whether he would stay on the job when his term ends- he dodged the question.