Fed keeps low interest rates
STACEY VANEK SMITH: Federal Reserve Chairman Ben Bernanke held a press conference yesterday to map out the Federal Reserve’s plan going forward. Bernanke said the recovery is still fragile and in spite of inflation worries the Fed won’t raise interest rates.
Karen Shaw Petrou of Federal Financial Analytics joins us now. Good morning, Karen.
KAREN PETROU: Good morning Stacey.
SMITH: So, obviously people all over the world were watching Bernanke’s speech yesterday. Were overseas markets happy with what they heard?
PETROU: They were thrilled because easy money is good for stock markets and the markets reacted in kind.
SMITH: How is it easy money because it seems as Bernanke indicated that they’re going to be easing up on all of the federal stimulus.
PETROU: They will but it’ll take a long time for the Fed’s policy to first stop and then to really drain out of the financial markets.
SMITH: What were international markets listening for most in Bernanke’s speech?
PETROU: They were listening for any hint, any wiggle, any small sign as to when the Fed would stop the easy money policy because that would begin to take some of the air out of the equity markets, start to push the dollar up. And the fact is we’ve just been talking about would start to go the other way. And that’s what the markets were waiting to hear. They didn’t hear it, so they went back to business, as it seems to be increasingly usual.
SMITH: Karen Shaw Petrou of Federal Financial Analytics. Karen thank you.
PETROU: Thank you.
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