Core Inflation(excluding energy and food) only 0.8% in U.S. Bernanke suggests more quantitative easing likely

U.S.Fed chairman Ben Bernanke has responded wisely to the latest inflation figures and the continued high unemployment by explaining to Fed watchers the high likelihood of a further major dose of quantitative easing. In the coming months it is very likely that the Fed will enter the bond markets to purchase more government bonds and short term paper to ensure that interest rates remain very close to zero in order to promote economic recovery and the maximum efficiency from the US government's stimulus. The strategy which I made central to my work on deficits and debt as monetary and fiscal tools for fighting a deep recession during the 1980s and early 1990s is designed to solve the problem of crowding out, encourage investors to enter the equity markets and entrepreneurs to undertake job creating investments and consumers to buy goods and services and thereby increase aggregate demand to lower the unemployment rate faster than is now occurring. While unemployment has dropped a little its rate of fall is far too slow to bring the rate down to reasonable levels in a short period of time. If the Congress were to pass a second substantial stimulus bill to reinforce the positive impact of further quantitative easing we would get a much better result. but in the absence of that initiative Bernanke is absolutely correct to embark on another major round of quantitative easing.