» Insights: What More Might Bernanke Say or Do at Jackson Hole? Decision Economics

Insights: What More Might Bernanke Say or Do at Jackson Hole?

Posted July 15, 2011 by CLeahey

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  • Bernanke  will keep the Fed’s options open and lay out a “to do list” in case the economy continues to disappoint.
  • At the top of the list is changing the composition but not the size of the Fed’s balance sheet.  TheFed could sell treasuries and buy mortgages and corporates in an effort to spur activity
  • This intermediate step will anger the hawks less than an increase in the balance sheet, the QE3 option.   QE3 probably requires the job growth to turn negative before Bernanke can push it through the FOMC. That would not happen for at least several months.
  • A change in portfolio composition would await approval of the FOMC at the September meeting.  So Bernanke will not be able be able to “do” anything immediately but at the next meeting  

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