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Fed's Bernanke Stays the Course

Federal Reserve Chairman Ben Bernanke.
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Ben Bernanke stays the course. He has not at all changed his dovish positions. He said, "the labor market generally remains weak" and that "overall inflation remains low," indicating he was little inclined to begin raising rates or stop asset purchases.

Lest there is any doubt about where he stands on continuing asset purchases, Bernanke said, "in the current environment, the benefits of asset purchases and of policy accommodation more generally are clear: monetary policy is providing important support to the recovery," noting the improvement in housing and auto sales.

Benefits of low rates outweigh risks. As for the concern that the Fed was encouraging the creation of asset bubbles, Bernanke said, "although a long period of low rates could encourage excessive this point we do not see the potential costs of the increased risk-taking in some financial market as outweighing the benefits of promoting a stronger economic recovery and more-rapid job creation."

In the question and answer period, when asked if the Fed would be able to unwind its $3 trillion balance sheet, Bernanke said, "We have the technical means to unwind it at the appropriate time" by selling or retaining assets.

When asked what would be the effect on markets if the Fed were to liquidate a bit, Bernanke said, "we could exit without ever selling by letting it run off." If it did have to sell, the Fed would sell "slowly, with lots of notice."

By CNBC's Bob Pisani