Bernanke blathers about banking ... FT tackles Fed statement language

Fed Chairman Ben Bernanke is currently blathering on about banking regulation. His speech appears to contain nothing new on the economic analysis/interest rate front. In the Financial Times, however, there is a story that talks about the possibility of the Fed removing language that pre-commits the Fed to keeping rates low for an "extended period." This is the first time such an idea has been floated and it appears to be giving the dollar a bit of a bid. More below:

"The US central bank has stuck with the “extended period” phrase – indicating policymakers see little likelihood that interest rates will rise over a time frame that has never been defined, but some see as at least six months.

"But now senior officials are starting to mull changing the statement in a way that would soften this guidance. That would be a natural step in the slow glide- path towards eventual policy normalisation.

"Importantly, however, it would also give the central bank greater flexibility to respond to inflation risks if they escalate in a way the Fed does not expect but cannot rule out."