Friday, October 15, 2010

A speech by Fed Chief Bernanke and a big release of economic data has produced a volatile morning so far. Bernanke's speech contained few surprises, but it confirmed the expectation that the Fed will provide additional monetary stimulus soon by purchasing Treasury securities. The Fed's purpose is to boost the economy and to bring the inflation level up to the Fed's preferred rate. According to Bernanke, "There would appear - all else being equal - to be a case for further action." Investors hoping for more information about the size of the purchase program were disappointed, as Bernanke stated that it is still being discussed by Fed officials.

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