Bernanke says QE3 is possible

April 25, 2012 at 5:17 PM   |   Comments

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WASHINGTON, April 25 (UPI) -- U.S. Federal Reserve Chairman Ben Bernanke asserted Wednesday that a third round of quantitative easing was an option policy makers would use if necessary.

"We remain prepared to do more as needed to make sure that this recovery continues and that inflation stays close to target," Bernanke said at a news conference following the Fed's policy decision announcement.

The Fed said it would continue with a federal funds rate of zero to 0.25 percent and a program of rolling over its portfolio to exchange short-term notes to longer-term securities.

However, Bernanke was asked "Some of your critics … think you're still being too cautious … is the committee now any closer to QE3 than it was at its last meeting?"

Bernanke said the Federal Open Market Committee "certainly has been bold and aggressive in terms of easing monetary policy."

Regarding a new round of securities purchases, "Those tools remain very much on the table and we will not hesitate to use them, should the economy require that additional support," he said.

Quantitative easing involves the central bank buying assets, which keeps demand for securities high and interest rates low. The last round was widely criticized by the international community as a side effect of the move is that it weakens the value of the dollar, which can be viewed as manipulating currency rates to favor U.S. exporters.

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