Ben "Just Call Me Easy" Bernanke

WSJ reporter Jon Hilsenrath is believed to talk to Fed chairman Ben Bernanke on a fairly regular basis. Thus, many Fed watchers believe that his comments should be monitored carefully.

Bernanke testified yesterday before the House Committee on Financial Services. In a post titled, What Bernanke Means, Hilsenrath made the following comments on various statements Bernanke made during his testimony:

 Lots of focus on downside risks here, which is striking because the Fed said in its June policy statement that downside risks to the economy had diminished. That’s a slightly “dovish” tilt toward easy money.
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Mr. Bernanke tries to be even-handed here about the outlook for bond purchases, but he spends a lot more time talking about the conditions that could convince the Fed to leave bond buying in place than he does on the conditions that would convince the Fed to pull back sooner than planned. Another dovish tilt.
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 The Fed has said it won’t raise the fed funds rate until after the jobless rate falls below 6.5%. These comments, along with others Bernanke has made, suggest the Fed could wait for a while even after the jobless rate falls below 6.5% before trying to raise short-term rates. The 6.5% threshold, it seems, appears to carry less and less meaning within the Fed as it tries to emphasize low rates for a long-time.
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 There seems to be a little shift in emphasis here. The Fed’s preferred measure of inflation is around 1%, below the Fed’s 2% goal. In his press conference in June, Mr. Bernanke emphasized his view that inflation has been driven down by “transitory factors.” Wednesday he seems to emphasize the damaging effects of low inflation , a little tilt toward keeping monetary policy easy.

Of note though, as I have been pointing out in the EPJ Daily Alert, while Bernanke talks easing, the money supply growth is slowing.