Bernanke defends QE as US economy shows continued growth

On Thursday, Federal Reserve Chairman Ben Bernanke came out to justify the Fed's quantitative easing. Reuters reports:

In his last planned public remarks as head of the central bank, Bernanke said concern about the potential harm to financial stability is the only risk from unconventional monetary policies "that I find personally credible."

But, he added "... we don't think that financial stability concerns should at this point detract from the need for monetary policy accommodation, which we are continuing to provide," Bernanke said.

The Fed's monetary policy does indeed appear to have kept the US economy afloat without triggering much inflation so far.

A report on Thursday showed that homebuilder confidence weakened a little in January with the NAHB/Wells Fargo Housing Market Index falling to 56 in January from 57 in December. Nevertheless, the index has now been above 50 for eight consecutive months.

Other US economic data on Thursday also pointed to continued growth.

Initial claims for state unemployment benefits fell 2,000 last week to 326,000, the second consecutive decline.

The Philadelphia Federal Reserve Bank reported that its business activity index rose to 9.4 points in January from 6.4 in December.

With sustained economic growth, consumer prices in the US increased 0.3 percent in December, pushing the annual inflation rate up to 1.5 percent from 1.2 percent in November. However, it remained below the Fed's inflation target of 2 percent.

Elsewhere in the world, Japanese economic data on Thursday were also positive. Core machinery orders jumped 9.3 percent in November to a five-year high while the tertiary index rose 0.6 percent in November after falling 0.9 percent in October.