Ben Bernanke made no news on policy with his testimony to Congress on Wednesday but he did set out very clearly why there is no news on policy. He repeated several times that the apparent strength of the labour market is not consistent with the apparent weakness of final demand.

Once:

“The decline in the unemployment rate over the past year has been somewhat more rapid than might have been expected, given that the economy appears to have been growing during that time frame at or below its longer-term trend; continued improvement in the job market is likely to require stronger growth in final demand and production.”*

 Read more

When the Federal Reserve dared to suggest some policy fixes for the troubled US housing market, it was not thanked for its efforts.

A white paper on housing published in January, followed a couple of days later with a speech by New York Fed president Bill Dudley on the same topic, provoked an onslaught of criticism from lawmakers.

Orrin Hatch, a Republican senator for Utah, said in a letter to Fed chair Ben Bernanke the paper contained “a number of policies that are clearly in the province of fiscal policy”.

For former Federal Reserve governor Randall Kroszner, now an academic at the University of Chicago’s Booth School of Business, the outcry demonstrates just one of the potential pitfalls central banks will face in their attempts to prevent crises. Read more