Fed Chairman Bernanke Appears Before the Senate Banking Committee
Fed Chairman Bernanke appeared before the Senate Banking Committee earlier this morning to testify regarding monetary policy issues. He told lawmakers the nation’s economic recovery is being held back by tighter financial conditions due to Europe’s debt crisis and uncertainty surroundingU.S.fiscal policy. Bernanke repeated his warning about the importance of the immediate need for congressional action related to developing a credible long-term plan to reduce U.S. government debt levels while avoiding sharp spending cuts and tax hikes in the near future. It was as though he was reading exactly from the script mortgage investors had previously written for him — which rendered the whole thing a non-event as far as its influence on the current trend trajectory of mortgage interest rates.
The day’s other economic news was equally uninspiring in terms of its impact on the direction of mortgage interest rates. Consumer prices were flat in June as the cost of gasoline dropped – exactly in-line with expectations. Stripping out the more volatile food and energy costs, the so called “core rate” of inflation at the consumer level increased a benign 0.2% – its fourth consecutive monthly gain at that rate.
In a separate report, the Fed said industrial production grew 0.4% in June while utility companies, factories and mines saw their capacity utilization rates edged up to 78.9% from 78.7%. The production number was stronger than the majority of investors had anticipated – but the utilization rate was notably lower than forecasts called for – so the whole thing was essentially shrugged off.