Bernanke Insists that the Economy is Not Ready to Sustain Itself
Yesterday, the U.S. dollar was seeing a bit of a rally. At that point, it was all about risk aversion. Today, the story is a bit different. Right now, it's all about U.S. economic fundamentals.
Federal Reserve Chair Ben Bernanke is testifying before Congress today and tomorrow, and today he said that the economy is not yet sustainable. So, even though there was a boost to the discount rate last week, the Fed isn't ready to really tighten monetary policy yet.
As a result of these remarks, the U.S. dollar is lower in forex trading. Dollar bulls are disappointed that monetary tightening will not be happening anytime soon, and the euro has been waiting for a chance for a few days now.
It will be interesting to see how things go from here, and what Ben Bernanke has to say about economic progress in further testimony -- and what he plans to do in order to exit from economic stimulus while limiting inflation.
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