Bernanke’s challenge: prime markets for policy turn


The Federal Reserve chairman , Ben Bernake , will need to tell investors that that the money policies followed by US central banks will change.

Bernake is commited to a process which consists In buying bonds, and due to this any change in policy would increase credit rates. Due to this Bernake is supposed to communicate any changes in policy by assuring all investors that the rates will stay low or any increase will not be visible. Bernake is expected to do this in a couple of months, while other Federal Reserve officials have already began with speeches around the entire country in order to be able to properly provide the information.

The Federal Reserve officials are worried that this policy change may not turn out the way they want, and make investors withdraw investments, since it is known that company officials believe that the Federal Reserve officials will choose new policies that will not stimulate the economy, but less stimulative.

The new buying policy is seen by the Federal Reserve as a temporary solution, which can be used until the job market will increase. This is not something which is seen with good eyes by economists since , such as Tom Simons which states that the market is too accustomed to the Feds always being there to adjust the offer and supply chain in market dynamics, but this may not be the case with the new policies, since there is a huge risk for the market to go haywire since investors can misinterpret the entire process and make abrupt bond sales after the program has ended, thus the end result would not be what the Federal Reserve officials expected, creating more economical disrupt that expected changes.

Since Ben Bernake is the official that promoted this idea, it would be a normal situation for him to continue the process, but this is not something expected in the economical world since in 2014 his time as the chairman of the Federal Reserve will end, thus he may not continue and leave everything in the hands of a successor, so the entire over $3 trillion worth in assets will need to have an unloading sheet created by someone relative new in the project. This is another factor that worries investors, even though Bernake stated that the Federal Reserve will guarantee the sold bonds. For now, it is obvious that experts are going everything they can to save the economy.