A Guide to Bernanke’s Humphrey Hawkins Testimony

Posted July 16, 2012 by Editor

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• Bernanke will speak to Congress on the economic outlook this Tuesday and Wednesday as part of the bi-annual Humphrey-Hawkins testimony.   
• While he may have to spend a lot of time explaining the Fed’s role in the widening libor scandal, investors are looking to see how ready the Fed is to undertake new unconventional policy such as QE3 to support the sagging expansion.
• Bernanke might surprise the markets and discuss options other than QE3 such as nominal GDP and price level targeting.  In fact he may even talk about a Fed variant of the new BoE program of funding for lending, which is designed to create new incentives for banks to increase loans.
• A more ambitious approach might take time to gather support within the FOMC and actually set up.  While a new policy easing by the Fed is still possible at the upcoming July 31/August 1 meeting, the Fed might defer to September when a full press conference is held to help explain what the Fed is doing and why they are doing it.

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