JP Morgan Asset Management's Chief Global Strategist, Dr. David Kelly, provides a simple recap and explanation of Ben Bernanke's recent comments regarding quantitative easing.
"In a press conference following this week’s FOMC meeting, Fed Chairman Ben Bernanke provided markets with a clearer understanding on how the Fed expects to phase out its current quantitative easing (QE) program. This timetable is justified both by economic progress and by the significant future costs which a too-large Fed balance sheet is likely to entail. Moreover, the timetable, while never previously explicitly outlined, should not have been a surprise to most market observers. Nevertheless, Mr. Bernanke’s words have been met by a sharp selloff across a wide range of financial assets. For investors, it is important to distinguish between logical market reactions and over-reactions while still positioning portfolios for an environment of rising interest rates."