Moreover, the European Central Bank is engaged in a large-scale asset-purchasing initiative that could be easily and rapidly expanded.
"I have to believe that the expectation of a second large-scale asset purchase program was the primary driver of those changes".
Until now he had not been an advocate for large-scale asset purchases to reinvigorate the economy.
But Mr. Bernanke said the Fed was ready to engage in a third round of large-scale asset purchases, known as quantitative easing, if needed.
Mr. Bernanke said that the Fed faced different conditions today than it did last August, when he signaled a second round of large-scale asset purchases, which ended last month.
Twice now the Fed has engaged in large-scale asset purchasing, a process known as quantitative easing.
According to the minutes of the April 30 to May 1 policy meeting, which were released on Wednesday, "a number" of officials were open to reducing large-scale asset purchases as early as the June meeting, but disagreement continued on what conditions would suffice to begin that move.
"Through a combination of near zero, or even negative, policy rates, large-scale asset purchases and forward guidance, central banks have been seeking to ease financial conditions in order to boost the economy and, above all, to bring inflation up closer to their numerical objectives," Borio said.
The longer central banks sought to floor interest rate at artificially low levels--particularly through large-scale asset purchases (or "QE") and, to a lesser extent, aggressive forward-policy guidance--the more investors would look to flee financial repression by investing in emerging markets.
So Fed officials tried a tactic pioneered by Japan's central bank in the early 2000s: large-scale asset purchases known as quantitative easing.
