EclectEcon

Can any reasonable person doubt that this is a particularly tricky time as the Fed tries to balance the threat of a significant economic slowdown (for which, if it occurs, the key factors are housing and energy prices) and a resurgence of inflation? Can any reasonable person doubt that, as it balances these threats, the Fed is not going to keep on raising interest rates forever? And can any reasonable person doubt that the Fed is going to want to gather all the information it can in determining exactly where to pause? To me, Bernanke is coming across as a very reasonable person, and I think the press makes a mistake if it continues to try to view him instead as the wizard behind the curtain.

So, is the Fed going to pause at 5%? I don't know, you don't know, the pundits don't know, and Bernanke himself doesn't know. It's going to depend on incoming data.

At least, that's what Bernanke said. So that's what I believe.