Bernanke Denies That Fed Policy is "Pre-Set"

Stupid, but not predetermined


Federal Reserve Chairman Ben S. Bernanke said the central bank's asset purchases "are by no means on a preset course" as he sought to tamp down an increase in borrowing costs that threatens to slow the economic expansion.

"We're going to be responding to the data," Bernanke said today to the House Financial Services Committee. "If the data are stronger than we expect, we'll move more quickly" to reduce purchases. If data "don't meet the kinds of expectations we have about where the economy's going, then we would delay that process or potentially increase purchases for a time."

Stocks and Treasuries rallied on optimism that the Fed is prepared to delay an exit from its quantitative easing program should the four-year expansion show signs of faltering. Fed officials are trying to reverse an increase in Treasury yields since June 19, when Bernanke outlined the possible timing for a reduction in the $85 billion monthly pace of bond purchases.