U.S. Federal Reserve Chairman Ben Bernanke testified before Congress today, providing an update on the economy and on the central bank’s $85 billion per month bond-buying program. The key phrase most media outlets are pulling out of that testimony is that the program isn’t on any “pre-set course,” and it certainly appears now that the chairman favors continuing the Fed’s stimulus efforts.

Ben Bernanke

What Ben Bernanke said about a “pre-set course”

The Wall Street Journal’s Jon Hilsenrath took a closer look at exactly what Ben Bernanke said and provided possible explanations for what he means. Overall, Hilsenrath sees a dovish tilt to the Fed chairman’s remarks. Specifically in terms of the comment about a “pre-set course,” the economics correspondent believes Bernanke is attempting to be “even-handed” about the program, although he points to the rest of that section of testimony rather than taking it out of context.

Although Bernanke does mention what kinds of economic conditions might cause them to scale the program back more quickly, much of that portion of the testimony focuses on what type of conditions might cause them to leave the bond-buying program as it is. For example, the chairman provided the following conditions as possible reasons to keep buying bonds: if employment outlook becomes “relatively less favorable,” if inflation doesn’t seem to be moving back toward 2 percent or if financial conditions “were judged to be insufficiently accommodative to allow us to attain our mandated objectives.

In terms of tapering the program, he simply says that if conditions “were to improve faster than expected” and if inflation seems to be going back toward their objective.

Ben Bernanke focuses on downside risks

And that isn’t the only area where Bernanke focused on downside risks to the economy. He also mentioned that “tight fiscal policy” might “restrain economic growth” by more than they expect. Other downside risks he gave were fiscal debates like talk about the debt ceiling. Overall, he emphasized that the U.S. economy is still “vulnerable to unanticipated shocks, including the possibility that global economic growth may be slower than currently anticipated.”

How long will it be before the Fed tapers?

Now we get to the burning question investors want to know. When will the Federal Reserve start tapering its bond-buying program? The last time Ben Bernanke testified, he said they wouldn’t increase the funds rate until after unemployment drops below 6.5 percent. Hilsenrath believes this means that it could be some time after unemployment reaches that level before short-term rates are increased. In his view, the 6.5 percent unemployment rate “appears to carry less and less meaning within the Fed as it tries to emphasize low rates for a long time.”