Ben Bernanke, the Federal Reserve Board Chairman, has said that he did not have all the answers as to why the US economy has struggled of late as the U.S. central bank closed the doors on a controversial bond purchase program.
“We don’t have a precise read on why this slower pace of growth is persisting,” Bernanke told a press conference after the Federal Open Market Committee meeting where the central bank revealed that it will be ending a $600 billion bond purchase program as planned in eight days and kept interest rates at historic lows.
The Chairman said "some part" of the slowdown was because of temporary factors like higher food and gasoline prices but also said it was possible that some of the slowdown might be to longer-lived issues that could persist into 2012 citing weakness in the financial sector, the housing market and consumer balance sheets as three headwinds.
“We have an awful lot of uncertainty right now about how much of the slowdown is temporary, how much is permanent; so that would suggest, all else equal, that little bit of time to see what’s gong to happen is -- would be useful in making policy decisions,” Bernanke said.
Bruce McCain, chief investment strategist for Key Private Bank in Cleveland, said he was struck by Bernanke saying “several things about how much the Fed doesn’t know and how much they are flying by the seat of their pants."
“In some ways, it shows the emperor doesn’t have as many clothes as we thought,” McCain said.