Today’s commentary from Bernanke said nothing we don't ready know, and nothing he hadn’t already said.
In usual fashion, Bernanke’s speech repeated the notion that growth is slow but happening, and that the Fed would do everything possible to protect the nation. While he made his reassurances, he also cautioned Congress against cutting or raising taxes too quickly, both of which could lead to derailment of the slow recovery.
What he did not touch on much, however, was the housing market. Mentioned only in one paragraph of the statement prereleased on the Fed’s website, his thoughts on housing included a description of the bleak state of the housing market, but left out any call for government action.
“Uncertain job prospects, along with tight mortgage credit conditions, continue to hold back the demand for housing,” Bernanke said. While low interest rates and home price declines gave a boost to housing affordability, residential sales and construction remain low, attributing both to “a persistent excess supply of vacant homes, largely stemming from foreclosures.”
…and that’s all he said.
This lack of call to action is in direct contrast to his aggressive call last month for lawmakers and the Obama administration to do more to help homeowners, and certainly offered no indication of his thoughts on the legislation Obama proposed Wednesday and I blogged about here. Bernanke is not known for taking on proposals directly in these updates to the budget committee, so perhaps we will hear more from him after the expected rejection of the proposal by Congress.
In taking questions after the speech, his comments last month came back to haunt him.
"I was taken aback when the Fed issued an unsolicited white paper on housing policy and it mirrored in many ways the administration's policies on housing," said Rep. Scott Garrett, R-N.J., comparing the move to the House instructing the Fed on monetary policy.
Bernanke responded that the weak housing market was holding back overall growth, and while the Fed didn’t endorse any specific policy action it was “trying to provide pros and cons.”