The Federal Reserve has little room to safely make an adjustment in course, giving even greater weight to Ben Bernanke's comments. The Fed chairman gave a speech at a conference in Massachusetts this week voicing mild optimism over the economic outlook and vowing to resist a rise in inflation expectations. Although just talk, Bernanke's words caused a strong reaction from the markets. Many focused on Bernanke's optimistic tone, but he also managed to get across concern about what has been dubbed the "adverse feedback loop."

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