On Tuesday President Obama announced plans to keep Federal Reserve Chairman Ben Bernanke in his job for another term.
"As an expert on the causes of the Great Depression, I'm sure Ben never imagined that he would be part of a team responsible for preventing another. But because of his background, his temperament, his courage, and his creativity, that's exactly what he has helped to achieve. And that is why I am re-appointing him to another term as Chairman of the Federal Reserve," said the President.
In sticking with Bernanke, Obama is looking to reassure the financial sector as well as foreign central banks that his administration has no plans to change course on its largely well-received approach to rescuing the industry from its meltdown or its management of overall monetary policy.
I think the Fed got it right, says Ed Lazear, former chairman of the President's Council of Economic Advisers. For the most part we’re back on track. I wouldn’t change course here.
Bernanke's four-year term expires in January and the president had not been expected to make an announcement until later this year. Obama acted now to "put to rest" speculation about the Fed chairman's future, a White House official said.
However, skeptics believe the announcement may have been a defensive move timed to deflect attention from less market-friendly news on Tuesday. The White House raised its 10-year cumulative budget deficit projection by $2 trillion to approximately $9 trillion. That would push the national debt up from more than $11 trillion now to more than $20 trillion in 2019.
No matter if the timing was shrewd or coincidental, the reappointment means Bernanke is now solidly in place at the Fed for years to come. What's the long-term trade?
I think we’re going to see a dramatic shoot higher in the 10-year, speculates Joe Terranova, and that’s going to boost commodity prices.
What do you think? We want to know!
