The Federal Reserve Chairman Ben Bernanke appeared before the Joint Economic Committee in Congress today to explain the position of the Central bank on its bond buying program, among other things. There was a clear takeaway from the testimony, Ben Bernanke is promising nothing when it comes to ending QE3.

Ben Bernanke FED

According to Jon Hilsenrath over at the Wall Street Journal, what Bernanke said this morning was that when the Federal Reserve decides to end QE3; “it won’t be abrupt, and it won’t be predictable.” Bernanke is, according to Hilsenrath, trying to kill speculation that the Federal Reserve will consistently taper off the bond purchasing program.

Fed Is Likely To Take One Step At A Time

Instead, the Fed is likely to take one step at a time, and try to figure out the effect each step has on the US economy. If the reduction in bond buying does economic growth, or other indicators, in the US a disservice, the Fed might stall at that level for a while, or it might even decide to ramp up purchases again.

The Federal Reserve’s strategy for ending QE3 is not going to be predictable. That makes it more difficult for investors trying to invest around expectations about the stimulus, but the message that Bernanke is trying to get across is that investors shouldn’t be investing as if there’s some long term plan for Quantitative Easing. Bernanke is trying to tell us that there isn’t one.

At the Ira Sohn conference in New York, investors like Jeff Gundlach speculated that there might be no end in sight for quantitative easing, because it was the Federal Reserve’s way of financing the current budget deficit, and the total national debt. Low bond yields make it cheaper for the government to borrow, and the increasing expense on that front will be an important part of Fed policy in ending the program.

Bernanke did give some hint about the beginning of the end for the program during today’s testimony, though nothing concrete was weighed. Bernanke said that QE3 may begin to wind down at one of the next few meetings of the Federal Reserve, but it depends on the way the economy performs until then.

The Fed is trying to counteract the chaos that might erupt should it begin to ease of QE3 and then switch its position. Whether the market listens will be evident when, if ever, the bank starts to wind down the program.