via a special arrangement with Informa Economics, Inc.
FOMC minutes | Fed speeches | Employment report
NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.
This is the week of the year when – absent an earthquake and/or a hurricane – Washington is very quiet. It's the week when many take or continue on vacation. And it is the last week before lawmakers come back from their summer "recess".
There are some important economic reports and events on tap this week. One is Tuesday's release of Federal Open Market Committee (FOMC) meeting notes from the Fed's Aug. 9 monetary policy meeting. It could provide some hints of Fed action ahead – in addition to any signals observers think they gleaned from Fed Chairman Ben Bernanke's address last Friday at Jackson Hole, Wyoming.
Bernanke last Friday hinted that the Federal Reserve will do more to support the stalling U.S. economy, saying the central bank "is prepared to employ its tools as appropriate to promote a stronger recovery" and will extend its September monetary policy meeting to two days "to allow a fuller discussion." But unlike last year, Bernanke offered no detailed discussion of the Fed’s easing options. "The Federal Reserve has a range of tools that could be used to provide additional monetary stimulus," Bernanke said. "We discussed the relative merits and costs of such tools at our August meeting. We will continue to consider those and other pertinent issues, including, of course, economic and financial developments, at our meeting in September."
Bernanke specifically noted concern about long-term unemployment, saying that it could leave a "major scar" on the US economy. He also criticized fiscal policymakers, suggesting their arguments about the debt ceiling had most likely harmed growth. "Most of the economic policies that support robust economic growth in the long run are outside the province of the central bank," he said.
The Fed Chairman said recent data suggested first-half growth was slower than expected, noting that "temporary factors can account for only a portion of the economic weakness that we have observed" He added that the Fed had cut its growth forecasts and expected inflation to settle at or below the Fed’s target.
He also said the Fed’s recent guidance that short-term interest rates are likely to remain exceptionally low until mid-2013 and added that it is the most likely outcome rather than a certainty. "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 levels for at least two more years," Bernanke said.