Tomorrow, Ben Bernanke will make his first speech since turmoil erupted in the world's financial markets early this month. As Wall Street listens for clues about whether interest rates will be cut next month, the Fed chief be walking a tightrope, the Washington Post observes. If he appears indifferent, panic could deepen; if he seems too anxious to stem losses, he'll encourage more irresponsible investing.
Bernanke observers say his position is that steep falloff in the price of mortgage-backed securities doesn't necessarily require Fed action, but when broader markets freeze, the health of the economy is jeopardized. "The chief characteristic of a financial panic is that investors lose their bearing," says one analyst. Whether interest rates are cut will depend on how much investors' confidence has recovered over the next several weeks.