Fed Chairman Ben Bernanke’s news conference on November 2 included the admission that the Fed is depending on hope and patience to see if its continuing strategies of Operation Twist and zero interest rates will grow the economy out of recession. In his session with reporters, Bernanke defended Fed actions in the face of increasing criticism from both the left and the right.
Three years after the Federal Reserve’s massive and continuing interventions in the financial markets, Bernanke was forced to admit that “recent indicators point to continuing weakness in overall labor market conditions and the unemployment rate remains elevated…and consequently [the Fed] anticipates that the unemployment rate will decline only gradually…. Moreover, there are significant downside risks to the economic outlook.” He added that “we did underestimate the pace of recovery for some fundamental reasons,” including the continuing declines in the real estate markets and “a certain amount of bad luck.”
Bernanke was forced to reduce further his estimates about the rate of