The dollar has risen due to Fed chairman Ben Bernanke's assurance that the Fed will tighten monetary policy down the road to prevent "the emergence of an inflation problem." This is, however, a qualified assurance as Bernanke has again emphasized that he will only raise rates "as economic recovery takes hold." This begs the obvious question, what happens if economic rcovery doesn't match expectations? Already, the American situation is being termed a "jobless recovery." Raising rates in the current environment would certainly cancel any fragile gains in the stock market. On the other hand, waiting for a jobs recovery (which is unlikely to happen any time soon) increases exponentially the danger of waiting too long to reign in the cash. Bernanke is in a box and he knows it.
Friday, October 9, 2009
"Dollar rises on Bernanke comments"
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