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Since the financial crisis, the Federal Reserve has been pumping billions of dollars into the economy each month to help stimulate growth. Yesterday, after a two-day meeting, Fed policymakers announced they will begin to dial back that stimulus. This so-called tapering will begin in January. But at a news conference, his last as Fed chairman, Ben Bernanke insisted that the Fed's over-all support for the economy remains strong, and that sent stocks soaring.
Here's NPR's John Ydstie.
JOHN YDSTIE, BYLINE: Early in his news conference, Bernanke made the point that the Fed was ready to dial back its bond-buying program from $85 billion a month to 75 billion because of a program which started in September of 2011, has been successful.,
BEN BERNANKE: Since then, we've seen meaningful cumulative progress in the labor market. For example, since we began the current purchase program, the economy has added about 2.9 million jobs and the unemployment rate has fallen by more than a percentage point to seven percent.
YDSTIE: At the same time, Bernanke insisted the Fed is not reducing its over-all support for the economy. That's because Fed policymakers decided to lengthen the time they will keep short term interest rates extraordinarily low.
BERNANKE: We expect to keep rates low well beyond the point that unemployment hits 6.5 percent.
And that could mean extremely low interest rates for more than a year. That pleased the stock market. In the past, investors have sold off sharply whenever the Fed seemed close to reducing its monthly stimulus. But yesterday stocks climbed to record levels.
YDSTIE: Bernanke is scheduled to hand over his leadership of the Fed to Janet Yellen on January 31st. He was asked whether Yellen is fully supportive of the moves the Fed made yesterday.
BERNANKE: I have always consulted closely with Janet - even well before she was named by the president - and I consulted closely with her on these decisions as well. And she fully supports what we did today.
YDSTIE: Bernanke also reflected a bit on the tumultuous two terms he's spent at the Fed. He arrived in 2006, just before the global financial system began teetering under the weight of toxic U.S. mortgage securities. He acknowledged he was slow to recognize the crisis.
BERNANKE: In retrospect, it was a traditional classic crisis but in a very, very different guise, different types of financial instruments, different types of institutions, which made it for a historian like me more difficult to see.
YDSTIE: Many analysts believe that after some stumbles at the beginning of the crisis, Bernanke made key decisions that helped stabilize the global economy and avoid a more serious collapse. Bernanke said he is proud of his efforts to make the Fed a more transparent organization.
Under his leadership, the Fed chairman began giving regular news conferences. The Fed also offers clearer guidance on how long it expects to keep interest rates at certain levels, and it has set a firm target for inflation. As recently as the 20 years ago, the Fed didn't even release a statement after its policy-making meetings and left it to the market to divine its intentions.
John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.