Federal Reserve chair says it depends

Posted by Frank James at 11:12 am CDT

Federal Reserve Chairman Ben Bernanke didn't really give us much to go with today on what's likely to happen to interest rates. So what else is new?

At the end of his prepared testimony today, he said the following:

In regard to monetary policy, the Federal Open Market Committee has left its target for the federal funds rate unchanged, at 5-1/4 percent, since last June. To date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation. Because core inflation is above the levels most conducive to the achievement of sustainable growth and price stability, the Committee indicated in the statement following its recent meeting that its predominant policy concern remains the risk that inflation will fail to moderate as expected. However, the uncertainties around the outlook have increased somewhat in recent weeks. Consequently, the Committee also indicated that future policy decisions will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

What it seems to boil down to is the Fed deciding on whether to raise, hold or lower the short-term interest rates it controls based on new economic data that come across its desks. Sounds like a plan.