According to an article of the Wall Street Journal of today,the financial tightening that has accompanied the recent rise in interest rates is "unwelcome"
Explaining several reasons for the increase in interest rates "Mr. Bernanke said one likely culprit is the unwinding of "leveraged and perhaps excessively risky" positions by investors lulled by the Fed's ultra-easy money policies.
"It's probably a good thing to have that happen, although the tightening that's associated with that is unwelcome," Mr. Bernanke told members of the Senate Banking Committee.
By squeezing out market excesses, Mr. Bernanke said the interest-rate increases have also helped ease concerns among some Fed officials that the central bank's policies have been contributing to building risks in the financial system.
During his testimony Wednesday before a House panel, Mr. Bernanke stressed that the Fed would be watching for any adverse impact to the housing market from recent rate moves. He said the Fed would act if necessary to ensure the housing recovery doesn't falter.
Mr. Bernanke also cautioned that "it's way too early to make any judgment" about exactly when the first reduction to the bond program will happen. He demurred when asked about market speculation that the first reduction will happen at the Fed's Sept. 17-18 policy meeting, saying it will depend on economic data.
Source: The Wall Street Journal
