U.s. Federal Reserve Chairman Ben Bernanke addresses the independent Community Bankers of America (ICBA) 2011 National Convention in San Diego, California, March 23, 2011.
Credit: Reuters/Mike BlakeBy Mark FelsenthalWASHINGTON | Wed april 27, 2011 1: 09 am EDT
WASHINGTON (Reuters)-Federal Reserve Chairman Ben Bernanke on Wednesday will probably use his first press conference on monetary policy to hammer home the case for a patient approach to the comprehensive support of the central bank for the American economy.
After a two-day Fed policy meeting, Bernanke will be faced with the press in the first regularly scheduled press conference by a Fed Chairman in the central bank's 97-year history.
He is expected with the opportunity to strengthen the consensus view at the central bank that the economy is still a need to support the monetary policy of the Fed. That consensus is challenged by some hawkish Fed officials who are concerned the u.s. make central bank may wait too long to raise interest rates.
The Fed runs other central banks in tightening of financial conditions. The European Central Bank benchmark rates increased earlier this month, a move that helped the dollar hit a 16-month low against the euro on Tuesday.
In contrast, the Fed's policy setting Federal Open Market Committee, in a statement, due at about 12: 30 pm GMT (1630), is expected to indicate it will go are 600 billion dollar bond-buying program through a planned closure at the end of June. It is also expected to reiterate that it will keep interest unusually low for "an extended period of time."
"The FOMC meeting won't break new ground in substance, but will Bernanke a new place to show that the pigeons are in control," said Eric Green of TD Securities.
The Fed's statement will be overshadowed by Bernanke's historic press conference at 2: 15 pm (1815 GMT).
BERNANKE'S BALANCING ACT
Journalists are likely pressing of Bernanke to go further than the central bank pithy statement to provide more insight on how and when the Fed might begin to tighten policy.
The Fed chopped benchmark short-term interest rates near zero in December 2008 and then bought $ 1.4 trillion in the longer-term mortgage-related debt and Treasury securities to pull the economy from a deep recession.
When the recovery marked last year, the Fed launched its latest round of buying of bond.
Fed officials known voice consensus views--such as Vice Chair Janet Yellen and New York Fed President William Dudley--have defended the monetary support as important medication for an economy with unemployment at 8.8%.
While Bernanke is unlikely to offer a timeline for rate hikes, he can gain insight into the latest thinking on how the Fed officials will go on tightening policy.
Last year, he said the first step to leave would probably raise interest rates. However, recently some officials have insisted that first bonds are sold.
The central bank the statement is to suggest officials see the restoration on solid ground, even though it was the slow growth in the first quarter of the year.
At the same time, the Fed is expected to again concerned about the high level of unemployment and repeat that upward pressure on inflation from rising commodity prices would prove ephemeral.
This would be the scope of the Fed to continue to nurse the recovery with its easy monetary policy.
"The prospects of the baseline for the Fed is that the rates increase will not be for a long time," said Michael Yawn of Barclays Capital. "They just don't want to reduce precommit and flexibility."
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