The ping-pong match between the ECB and Fed to see who can make the worst policy decisions the fastest, switched back in favor of the Fed today with Bernanke's pledge to pour on the monetary stimulus if needed.
Please consider Fed Ready With Stimulus If Needed
Federal Reserve Chairman Ben S. Bernanke told Congress the central bank is prepared to take additional action, including buying more government bonds, if the economy appears to be in danger of stalling.
“The possibility remains that the recent economic weakness may prove more persistent than expected and that deflationary risks might reemerge, implying a need for additional policy support,” Bernanke said in prepared testimony before the House Financial Services Committee in Washington today. “The Federal Reserve remains prepared to respond should economic developments indicate that an adjustment of monetary policy would be appropriate.”
Bernanke acknowledged there are “uncertainties” in both directions -- about the strength of the economic recovery and the prospects for inflation -- over the medium term.
The Fed chief repeated his belief that inflation won’t be a problem for the economy because gasoline and food prices, which had surged earlier this year, are now moderating.
Dollar Tanks on Bernanke's Comments
Bloomberg reports Dollar Weakens as Bernanke Says the Fed Will Respond If Stimulus Is Needed
The greenback fell the most in six months versus the euro as Bernanke said central bank is prepared to take additional action, including buying more government bonds, if the economy appears to be in danger of stalling. The Australian and New Zealand dollars led earlier gains against the currency after China’s economic growth exceeded analysts’ estimates. The euro advanced as Italian and Spanish bonds rose for a second day.
Gold Hits Record High
In the wake of Bernanke's statements Gold Advances to Record High
Gold futures surged to a record $1,588.90 an ounce as the dollar’s slump and the European debt crisis spurred demand for precious metals as alternat