Federal Reserve Chairman Ben Bernanke says the Fed will hold the line on short-term interest rates for now, but Bernanke also detailed the steps the Fed will eventually have to take to head off inflation, which are expected to raise the cost of borrowing. In prepared testimony to lawmakers, Bernanke said the Fed intends to hold a key short-term interest rate, the federal funds overnight rate, at its current record low for an "extended period" (the Fed chairman was scheduled to testify before the House Financial Services today, but the hearing was cancelled due to weather).But when the time comes to tighten monetary policy to "prevent the development inflationary pressures," Bernanke said the Fed intends to raise the rate it pays on banks' excess reserves. That would push short-term interest rates up, and put upward pressure on long-term rates as well."By increasing the interest rate on reserves, the Federal Reserve will be able to put significant upward pressur...
by Brad Inman | on Mar 21, 2017
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