Fed Chairman Ben Bernanke said in a speech in Philadelphia today that the central bank remains committed to supporting the economy with loose monetary policy despite the decision to reduce the size of its monthly stimulus.
Mr Bernanke, who is in his final month as Fed chief, said that the decision at last month’s FOMC ‘did not indicate any diminution of commitment to maintain a highly accommodative monetary policy for as long as needed.’
Mr Bernanke noted that unemployment remains high at 7%, a reason for caution, but that conditions bode well for US economic growth going forward.
Stock indices rose to highs for the day in the wake of Mr Bernanke’s comments, with the Dow climbing 0.43% or 70 points to 16,511 with around half an hour to the close on Wall Street, while the S&P 500 rose 0.22% to 1836.0.
We will have access to even more information regarding the FOMC’s decision-making process next week when the minutes from the last policy meeting are published on Wednesday. Other highlights on the economic calendar include Friday’s non-farm payrolls report.
Once we’ve got December’s employment data out of the way, the focus of the market is quite likely to switch to the more granular level of individual corporate reports as we enter the thick of the US quarterly earnings season.