Bernanke: More Q.E. Possible, Perhaps Even if Infl Over 2%

By Steven K. Beckner

Wednesday, January 25, 2012 - 17:52

WASHINGTON (MNI) - Federal Reserve Chairman Ben Bernanke left no doubt Wednesday that he and a majority of his fellow policymakers are prepared to resort to more quantitative easing under certain circumstances -- possibly even if inflation is running above the Fed's newly announced 2% target.

Bernanke defended the Federal Open Market Committee's decision to extend until at least late 2014 the period of "exceptionally low" short-term interest rates and went further in a post-FOMC press conference to assert that the Fed is prepared to do more asset purchases to hold down long-term rates if the pace of economic growth and job gains is deemed unsatisfactory and inflation remains low.

Bernanke said that, unlike the European Central Bank and other central banks with an inflation target, the Fed will give equal weight to the two aspects of its statutory dual mandate -- price stability and maximum employment.

But the Fed chief didn't rule out further stimulus measures in a situation where inflation was running above target, but unemployment was still too high, suggesting the Fed could afford to take its time bringing inflation back to target if unemployment was running well above what the Fed regards as its "longer run" level of 5.2% to 6.0%.