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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (62787)	6/5/2006 4:07:14 PM
From: ild	Read Replies (1) \| Respond to of 110194

DJ Fed Bernanke: US Household Finances Not A Concern DJ Fed Bernanke: US Household Finances Not A Concern WASHINGTON (Dow Jones)--U.S. household finances remain in sound shape, Federal Reserve Chairman Ben Bernanke said Monday. "Overall, households have done a pretty good job of organizing their balance sheets," Bernanke said in a question-and-answer session to the International Monetary Conference in Washington, D.C. He said in reference to the effect of higher interest rates on household mortgage payments that most mortgages are fixed, and those that adjust to changes in official rates will do so over time. "Broadly speaking, I think financial conditions are not a concern" for households, Bernanke said. DJ Bernanke: 'Important Lags' Between Policy, Mkt Impact DJ Fed Bernanke: US Household Finances Not A Concern -2- Asked about the effect relatively low long-term market interest rates have had on Fed policymaking, Bernanke replied that "it does complicate the analysis." The Fed chairman was also asked about potential asset valuation bubbles. He said he has been "skeptical" of central banks' ability to judge when bubbles occur. Even if they could, using monetary policy to fix them would be "a very blunt tool," Bernanke said. DJ Fed Bernanke: US Household Finances Not A Concern -3- Bernanke was also asked about the lags involved between changes in official interest rates and the impact those changes have on financial markets and the economy. Fed officials have stressed in recent weeks that the lagged effect of the Fed's nearly two-year tightening campaign are an important consideration in setting future policy. Bernanke replied that there are "important lags" between changes in policy and their market impact, using the analogy of a quarterback throwing the football to where the wide receiver will be. He also said the importance of incoming economic data comes from how they affect economic forecasts, and that there isn't some "mechanical" link between data and policy.