NEW YORK – Accommodative monetary policies are still needed to support the economy, but the Fed is prepared to withdraw stimulus, when needed, Federal Reserve Board Chairman Ben S. Bernanke testified before the House Financial Services Committee today.
Bernanke said the Fed “has substantially phased out” lending programs that were used to ease the crisis, with only the Term Asset-Backed Securities Loan Facility (TALF) still operating. Large-scale purchases of Treasury securities, agency mortgage-backed securities (MBS), and agency debt, with purchases scheduled to end at the end of this month.
“In due course, however, as the expansion matures, the Federal Reserve will need to begin to tighten monetary conditions to prevent the development of inflationary pressures,” Bernanke testified, according to prepared text released by the Fed. “The Federal Reserve has a number of tools that will enable it to firm the stance of policy at the appropriate time.”
