(Image Source: Bloomberg News)

BY MALLORY PERRYMAN


BECKY QUICK: “This was the moment the market had been waiting for: is there going to be more monetary easing coming from the Fed?” (MSNBC)

The Fed Chairman spoke-- and the market listened. Stocks rallied as Ben Bernanke signaled- again- that the central bank is ready to caffeinate the sleepy economy.

Bernanke outlined the Fed’s plan during a speech in Boston. The Wall Street Journal bullet points the 15-pages of comments.


“1) Unemployment is way too high, and unlikely to fall much without some help from the government.

2) Inflation is too low and unlikely to return to the Fed’s target...without some help from the Fed.

3) The first round of bond buying...worked.

4) The Fed is thinking about publicly pledging to keep short term rates near zero for a REALLY long time.”

But is it a sizzle-with-no-substance kind of plan? A Bloomberg analyst says, Bernanke isn’t sharing a lot of details because he doesn’t have them.

WAYNE BROUGH: “I think the Fed is sort of throwing things at the wall at this point to see what works... if you have these price signals that are distorted by Fed policy, you’re going to have investors making bad investments and over time these bad investments accumulate and you feed into this boom and bust cycle.”

Bernanke says his plan is to use central bank funds to buy up long-term treasuries in an effort to drive interest rates down. Democratic Senator Evan Bayh suggests, at this point, the Fed is the economy’s only hope.

BECKY QUICK: “We had Senator Evan Bayh with us on set today who was listening to this and he says the other point is that the political reality is that Congress isn’t going to be giving any more stimulus, they don’t have the votes, it won’t get through. The only place the economy can turn is to the Fed.” (MSNBC)

A blogger for the the financial management site Action Forex says, Bernanke’s plan is just a bandaid over a bullet hole.

“...the problem is that we need for the US to work through its structural problems of excess debt and insufficient savings, and no amount of Fed cajoling of the economy is going to change that - it only risks smoothing over the problem in the short run at the risk of creating ever bigger long terms ones...”

According to The New York Times, Bernanke’s comments strongly suggest the Federal Open Market Committee, which sets monetary policy, is likely to take new steps at its next meeting, on Nov. 2-3.