WASHINGTON — Chairman Ben Bernanke says markets are more stable now that investors better understand the Federal Reserve's guidance on when it might start reducing its bond purchases.
"I think the markets are beginning to understand our message," he said at a House Financial Services hearing.
Last month stocks plunged after Bernanke said the Fed could reduce its $85 billion in bond purchases later this year if the economy improves. But stocks have since recovered after Bernanke and other Fed members have made clear that any change depends on the economy's performance, not a target date.
On Wednesday Bernanke told lawmakers the Fed's timetable is not on a "preset course."
Bernanke says it's important to provide guidance on the Fed's possible moves so that investors don't expect the purchases to continue indefinitely.