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If you wanted a clear picture of Federal Reserve strategy from the Ben Bernanke testimony to Congress this week, you were disappointed.
This week's Bernanke testimony highlighted the mixed signals Bernanke has been sending to markets – part of the reason Money Morning Chief Investment Strategist Keith Fitz-Gerald has said Bernanke is engaging in "monetary drunk driving" and is "jerking the wheel back and forth all over the road."
That's why two Bens showed up at his final Humphrey-Hawkins appearance before Congress: Accommodative Ben and Tightening Ben.
Bernanke said the $85 billion a month bond purchase plan would be slowed later this year if the U.S. economy stayed on its present course.
But he also told Congress the Fed was not backing away from its very easy monetary policy. He said "a highly accommodative monetary policy will remain appropriate for the foreseeable future."
Wall Street traders though appeared to be calmed by Bernanke's testimony. They enjoyed the tune Accommodative Ben was singing while tuning out anything that Tightening Ben said.
What Bernanke Said to Congress
In case you missed the whole Bernanke testimony, here are snippets from what Bernanke said to Congress.
Tightening Ben said, "On the one hand, if economic conditions were to improve faster than expected, and inflation appeared to be rising decisively back toward our objective, the pace of asset purchases could be reduced somewhat more quickly."
Translation: The bond buying could be tapered beginning later this year and actually end in the middle of next year.
Accommodative Ben said, "On the other hand, if the outlook for employment were to become relatively less favorable, if inflation did not appear to be moving back toward two percent, or if financial conditions – which have tightened recently (Treasury bond yields higher) – were judged to be insufficiently accommodative to allow us to attain our mandated objectives, the current pace of purchases could be maintained for longer."
Translation: If the U.S. economy does not improve to the level the Fed thinks it should be performing, bond purchases will be maintained indefinitely.