Maybe it was Australia’s decision to hike rates last week, the first monetary tightening among the G20 nations since the financial crisis began. Or perhaps it’s just the recognition of economic fate. Whatever the catalyst, Fed chief Ben Bernanke is now talking openly of the “exit strategy.”
“My colleagues at the Federal Reserve and I believe that accommodative policies will likely be warranted for an extended period,” Bernanke said yesterday, based on prepared remarks published by the Fed. “At some point, however, as economic recovery takes hold, we will need to tighten monetary policy to prevent the emergence of an inflation problem down the road.”