Bernanke Speaks on Fed's Past and Future

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Jan. 3 (Bloomberg) -- Federal Reserve Chairman Ben Bernanke discusses the Fed policy at the annual meeting of the American Economic Association in Philadelphia. (Source: Bloomberg)

Provide monetary compensation by lowering my -- lowering long- term interest rates.

Asset purchases reduce those long-duration assets in the hands of the public, depressing term premiums and producing longer-term yields.

The decision to begin or extend an acid program may have a signaling affect the extent that market -- market participants see that as indicative of a policy stance.

It is important to recognize that the potential signaling aspect of potential purchases depend on the policy context.

In particular, the fomc's decision to reduce asset purchases in its december meeting did not indicate any day munition of its commitment to obtain a highly accommodative monetary policy for as long as needed.

It reflected the progress we have made of substantial improvement and labor outlook that we set out when we began the current purchase program of september 2012. the committee reaffirmed and clarified its guidance on rates, stating it expects to maintain the target of the rate well past the time the employment rate threshold of 6.5 is crossed.

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