The “we stand ready” line has become a stale staple of Bernanke´s musings. Interestingly, simply because of the fact that Bernanke offered a “Bleak View” on the economy, at this moment the stock market is up, bond yields are up and the USD inched down relative to the euro. Seems that the markets expect a “Bleak View” to translate into “action” by the Fed. Maybe, but Bernanke, despite his “communication obsession”, remains guarded:

WASHINGTON—Federal Reserve Chairman Ben Bernanke delivered a bleak new assessment of the U.S. economy to lawmakers on Tuesday but remained guarded about what the Fed would do about the disappointing outlook. His restrained tone about additional action by the central bank initially disappointed stock investors and pushed down the Dow Jones Industrial Average and other stock indexes. “We haven’t really come to a specific choice at this point,” Mr. Bernanke said in answer to a question later. “We are looking for ways to address the weakness in the economy should more action be needed.”

His outlook has ‘darkened’:

Among his latest concerns was the outlook for business investment. In June, the Fed said investment was continuing to advance. But in his testimony, Mr. Bernanke marked down his assessment. Mr. Bernanke said investment had decelerated in the first part of the year and added that he foresaw “further weakness ahead.”

Although he tries to hide it, Bernanke seems to love ‘slow’ (maybe because it will keep inflation low):

He also sounded sharp concerns over the labor market, which Fed officials have made clear is central to whether they decide to enact more programs to spur growth. The Fed chief predicted that progress in reducing the country’s 8.2% unemployment rate “seems likely to be frustratingly slow.”

Meanwhile, today the Cleveland Fed released its latest “Inflation Expectations” information. Here also the picture remains ‘bleak’! The chart compares inflation expectations at mid-year for the last three years.