The Federal Reserve chairman, Ben Bernanke spoke in front of Congress today. While always an anticipated event for the media and markets, he didn’t really have much to say that we don’t already know. He encouraged Congress to pass a debt plan that had “fiscal sustainability” and would give confidence to both businesses and consumers. This is not a new concept and yet somehow needs to be reiterated every time he meets with Congress.
He talked about the slow growth in the economy and although there are signs of improvement it still has a long way to go. He expressed that obstacles to this slow growth were due to the depressed housing market and the European crisis. Again, nothing new here. If you took to the streets and asked most pedestrians what the big issues were blocking our economic growth probably 9 out of10 would mentioned those two (along with the lack of manufacturing jobs).
Finally, Bernanke repeated what the Fed said last week that short-term interest rates would stay at 0% through 2014. Prior to last week we had been told at least through 2013 and now we know it will continue through 2014. This isn’t earth shattering news but does put pressure on investors and retirees that need to live off a fixed income.
Given the lack of any new insights, the markets did not react significantly in either direction.