Bernanke has exit strategy. Will he use it?
J. Scott Applewhite/AP
Now, Fed Chairman Ben Bernanke has answered – sort of – in a Wall Street Journal op-ed and in congressional testimony Tuesday. The central bank "has the necessary tools to withdraw policy accommodation, when that becomes appropriate, in a smooth and timely manner," he wrote in his op-ed.
While that's reassuring, it's not what Wall Street is asking.
"His editorial is talking about the mechanisms of exiting," says Mark Rzepczynski, managing director of Lakewood Partners, a fund-management firm here in Boston. "The real [issue] is whether the Fed has the will to act."
By most counts, Mr. Bernanke has pulled off a great first act. He saved the financial system from a potentially disastrous meltdown, working effectively with first a Republican and then a Democratic White House. His bold moves to lower interest rates to near zero has eased the credit crunch and, arguably, shortened the recession.