Fed chairmen aren't inclined to make bold statements. So when they start throwing around italics in their speeches, it's kind of a big deal.
In a speech today, Ben Bernanke said:
...inflation is running at rates that are too low ... unemployment is clearly too high ...
Obvious points? Sure. But coming from a guy who runs the bank that can create a trillion dollars at the push of a button, they're worth noting.
The Fed has been signaling for a few weeks now that it's likely to buy some vast quantity of Treasury bonds soon. It's a strategy known as quantitative easing, and it's supposed to stimulate the economy by encouraging people to borrow and spend more money.
In the speech today, Bernanke a few nods to this (in typically understated Fed-chariman style):
Given the Committee's objectives, there would appear—all else being equal—to be a case for further action. ... a means of providing additional monetary stimulus, if warranted, would be to expand the Federal Reserve's holdings of longer-term securities ... the [Fed] is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation over time to levels consistent with our mandate.
It's likely the Fed will announce a round of quantitative easing at its meeting in the first week of November — and the latest economic signs only strengthen the case of those pushing for action. Figures out this morning suggest inflation remains superlow. And last week's jobs numbers showed that unemployment is still high.