Federal Reserve minutes were published today, and coupled with Ben Bernanke’s press conference, an new and unusual dynamic has surfaced for the markets and the public in general.

The unprecedented press conference gives direct exposure for Bernanke to the people, but to what end and consequence? I his mind, Bernanke may be seeking to help ease fears of the public and increase transparency.  The, until recently, rare opportunity for reporters to question the chairman may also work against the government’s position should the conference turn into a frenzy of negativism.

The FOMC minutes follow:

Release Date: June 22, 2011
For immediate release

Information received since the Federal Open Market Committee met in April indicates
that the economic recovery is continuing at a moderate pace, though somewhat more
slowly than the Committee had expected.  Also, recent labor market indicators have
been weaker than anticipated.  The slower pace of the recovery reflects in part factors
that are likely to be temporary, including the damping effect of higher food and energy
prices on consumer purchasing power and spending as well as supply chain disruptions
associated with the tragic events in Japan.  Household spending and business investment
in equipment and software continue to expand.  However, investment in nonresidential
structures is still weak, and the housing sector continues to be depressed.  Inflation
has picked up in recent months, mainly reflecting higher prices for some commodities and
imported goods, as well as the recent supply chain disruptions.  However, longer-term
inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment
and price stability.  The unemployment rate remains elevated; however, the Committee
expects the pace of recovery to pick up over coming quarters and the unemployment rate to
resume its gradual decline toward levels that the Committee judges to be consistent with
its dual mandate.  Inflation has moved up recently, but the Committee anticipates that
inflation will subside to levels at or below those consistent with the Committee's dual
mandate as the effects of past energy and other commodity price increases dissipate.
However, the Committee will continue to pay close attention to the evolution of inflation
and inflation expectations. 

To promote the ongoing economic recovery and to help ensure that inflation, over time,
is at levels consistent with its mandate, the Committee decided today to keep the target
range for the federal funds rate at 0 to 1/4 percent.  The Committee continues to
anticipate that economic conditions--including low rates of resource utilization and
a subdued outlook for inflation over the medium run--are likely to warrant exceptionally
low levels for the federal funds rate for an extended period.  The Committee will
complete its purchases of $600 billion of longer-term Treasury securities by the end of
this month and will maintain its existing policy of reinvesting principal payments from
its securities holdings.  The Committee will regularly review the size and composition
of its securities holdings and is prepared to adjust those holdings as appropriate. 

The Committee will monitor the economic outlook and financial developments and will act
as needed to best foster maximum employment and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley,
Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Richard W. Fisher; Narayana Kocherlakota;
Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.

As of this writing, the key points made by Bernanke in his press conference are to speak to the deficits faced by the government and states. He has indicated that spending cuts will not create jobs, of course one must consider the manner in which the question was asked of him. Further, he has indicated that spending cuts must be made in the long term.

Nothing new here, the only question is who is best suited to be creative and support the FOMC-like dual mandate.

The most troubling statement made by Bernanke so far is the Fed’s uncertainty with the sources of the recent slow down.