Are Fed actions as uncertain as the securities markets?
''Federal Reserve Chairman Ben Bernanke told the markets exactly what they wanted to hear at the Jackson Hole, Wyo., conference on Friday: The economy is still growing, the Fed has plenty of ways to save the economy if it stops growing, and inflation should settle down now that oil prices have retreated.
The stock market believed him. But the bond and gold markets weren't quite convinced. The Dow Jones Industrial Average rose 134 points Friday, capping a winning week. But Treasury yields fell slightly, and gold rebounded somewhat from a sharp selloff earlier in the week.
Stock investors may be overestimating just how much latitude Bernanke had to announce new measures to boost the economy. At the Federal Open Market Committee meeting earlier this month, three of 10 voting members lined up against the FOMC's decision to indicate it would keep interest rates low through mid-2013. The dissenters preferred not to put a date on the duration of the low-rate environment.
Given the unusual opposition, it's not surprising that Bernanke didn't imply that any new, grand changes to monetary policy were on the way. Instead, he announced that September's meeting would be expanded to a two-day affair.''