Ben Bernanke Testifies Before Congress

C-SPAN

Federal Reserve Chairman Ben Bernanke testified this morning before the Joint Economic Committee of Congress.

The main takeaway from his opening statement was that premature tightening of monetary stimulus risks slowing or ending the recovery.

Bernanke was grilled by Congress over when the Fed will begin tapering off of bond purchases, a prospect markets appear to be taking seriously in the past few weeks as government bonds have sold off and yields have risen. However, Bernanke is just repeating what he has already said in the past – it's dependent on the economic data, and the Fed could decide to decrease or increase bond buying based on how the data unfold.

Nonetheless, markets used this as an opportunity to give up earlier gains.

When asked whether concerns over financial stability stemming from the Fed's involvement in the bond market have increased recently, Bernanke responded that "they have increased a bit."

When asked about the Fed's effect on markets, Bernanke told the Committee that stock and bond prices do not appear inconsistent with the underlying fundamentals, and that asset price issues are "still relatively modest."

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