Bernanke Stays On-Message In Testimony To House Budget Committee

Fed Chir Bernanke testified at the House Budget Committe, and his remarks haven't changed since his speech at the National Press Club. He's still on message.

Bernanke repeated that despite gains in “highly visible” prices, core inflation and wages were moving lower.

“These downward trends in wages and price inflation are not surprising, given the substantial slack in the economy,” Bernanke said.

He defended the Fed’s decision to launch the bond-buying program, in light of the backdrop of both a high unemployment rate and low inflation.

Economists believe the Fed will complete the bond-buying program on schedule at the end of June.

Many do not believe the Fed will launch another round of asset purchases. Bernanke has been silent on whether he thinks more asset purchases are needed.

Barclays Capital economist Michael Gapen said Bernanke is in no hurry to discuss another round of asset purchases. He said such a discussion could wait until April.

What his testimony indicates is no change in the Fed's dove mode despite the Republican takeover of the House. The most influence all the criticism of QE2 is likely to have is a forestalling of QE3. The gold market didn't react much to his remarks; what little inpact he had was bullish.