Fed Chief Bernanke To Discuss Sluggish Economy | WAMU 88.5 - American University Radio
Filed Under:

Fed Chief Bernanke To Discuss Sluggish Economy

Play associated audio

Policymakers at the Federal Reserve wrap up a two-day meeting Wednesday and will explain what they plan to do about interest rates. The consensus seems to be they'll keep short-term rates near zero to help support the lagging economy.

While policy may remain unchanged, there will likely be a spirited discussion over whether the Fed should change course. And there could be some details released about the give and take around the table, because Federal Reserve Chairman Ben Bernanke will hold a news conference after the meeting. The news conferences happen four times a year and coincide with updates of the Fed's economic forecasts.

Like most observers, Randall Kroszner, a former Fed governor, now a professor at the University of Chicago, thinks Fed policymakers will stand pat on interest rates.

"At this point, I think the Fed is going to stick with that long-term commitment to keep interest rates low. There really hasn't been enough information to come in since the last meeting to suggest any change," Kroszner says.

The most important piece of data was a disappointing employment report at the beginning of April showing only 120,000 jobs were added to the U.S. economy in March — half the number added in January and February.

Kroszner says that report vindicated Bernanke's cautions about the economy when others were declaring victory early in the year.

"His caution is well-warranted. We didn't want to start popping the champagne corks after just a few months of good data in the job market because that's what a number o people did be back in 2010, were very disappointed, did it again in 2011 and were very disappointed," Kroszner says.

Since the jobs report, the economy has offered mixed messages. Stronger than expected retail sales, but flagging consumer confidence. On Tuesday, there were some signs that the housing market may have bottomed out, with a report on an increase in new homes sales in the past couple of months.

But John Tuccillo, a former economist with the National Association of Realtors and now chief economist at Florida Real Estate, says it all depends on jobs.

"If we don't see strong job growth, then we're not going to have a real estate market that comes back sooner rather than later. So it's extremely important," Tuccillo says.

Still, Kroszner says it's unclear where the job market and the economy are headed.

"I don't see recession on the horizon, but I don't see breakout growth coming, either. And I think given the mixed data that's out there, reasonable people can disagree," he says.

So Kroszner says there will be a rich discussion around the Open Market Committee table, but no change in policy.

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

NPR

Fresh Air Weekend: Toni Morrison, Ross Macdonald's Crime Fiction, Will Forte

Nobel laureate Morrison reflects on her life and her regrets; Maureen Corrigan reviews a reissue of four of Macdonald's 1950s novels; SNL alum Forte discusses comedy and Bruce Dern's acting advice.
NPR

PepsiCo Swaps Diet Drink's Aspartame For Other Artificial Sweeteners

The company says Diet Pepsi consumers are concerned about aspartame. But the Food and Drug Administration has long affirmed that the sweetener is safe in amounts commonly used by beverage companies.
NPR

Surgeon General Vivek Murthy On Gun Control, Vaccines And Science

Surgeon General Vivek Murthy was officially sworn in this week. His confirmation was held up for more than a year because of comments he made about gun violence. Murthy talks with NPR's Scott Simon.
NPR

As Health Apps Hop On The Apple Watch, Privacy Will Be Key

The notion of receiving nutrition advice from artificial intelligence on your wrist may seem like science fiction. But health developers are betting this kind of behavior will become the norm.

Leave a Comment

Help keep the conversation civil. Please refer to our Terms of Use and Code of Conduct before posting your comments.