Reaction to Bernanke's speech

NEW YORK (Reuters) - The Federal Reserve is set to act as needed to limit the impact of financial turmoil on the economy, but will not bail out investors who made poor decisions, Fed Chairman Ben Bernanke said on Friday.

"The committee continues to monitor the situation and will act as needed to limit the adverse effects on the broader economy that may arise from the disruptions in financial markets," Bernanke said in a speech to a symposium organized by the Kansas City Federal Reserve.

COMMENTS:

RICHARD GILHOOLY, FIXED-INCOME MARKET STRATEGIST, BNP PARIBAS, NEW YORK:

"The only thing I saw that was really new was that the financial losses exceed the most pessimistic forecasts but then he goes on to say that it is not the Fed's responsibility to protect investors. So there is no put. He confirms what we suspected that there is no Bernanke put and that means no rate cut."

DAVID SLOAN, ECONOMIST, 4CAST, NEW YORK:

"I think it's probably consistent with a potential for easing in that he is down playing the importance of recent data. He is going to try and look at timely indicators. On the other hand you can say he is not trying to bail out the housing market, he is really focusing on the overall economy. There is a little bit which can be seen as on the hawkish side and little bit which can be seen on the dovish side. He is trying to be forward looking on the economy, but he is not focused entirely on the housing market. The issue really is whether this financial turmoil will spill over to the broader economy. His options are left open. He is acknowledging he is in a pretty difficult job at the moment. We expect easing in September. At first glance there is nothing to cause us to change our minds on that yet."

SUBODH KUMAR, CHIEF INVESTMENT STRATEGIST, SUBODH KUMAR & ASSOCIATES, TORONTO:

"You could read between the lines that the Fed may ease in September, but I view that any kind of ease would be moderate as the Fed is still suggesting that market solutions are going to be primary. To me when it comes to the equities side what that means is that the corrections and volatility we've seen will still be ongoing, because the issue of debt and subprime is going to take time to resolve.

"I think that there have been a number of people on Wall Street that have been suggesting that the Fed should go for an immediate ease to relieve the problems. The Fed is saying it will not bail people out.

"But the Bernanke Fed is saying that unlike the late 1990s they are not accommodating easy credit and that is the underlying message. In the longer run that is important because if you are supporting excessive speculation that is not helpful, much as in the late 1970s inflation was not accommodated."

EZECHIEL COPIC, SENIOR CURRENCY ANALYST, IDEAGLOBAL, NEW YORK:

"He was pretty well balanced -- he said they'll act as necessary but won't bail people out of bad decisions they've made. We have to wait for more data, because he did say that given the turmoil, some of the recent data doesn't mean much. The August data won't come until September, so until then, it will be back to news and rumors surrounding subprime. The dollar is getting some safe-haven bids, but it's also people squaring up positions, as dollar did sell-off a bit before the Bernanke speech. And going into the holidays, it's back to rumors and news and people don't want to be too far one way or the other. Bush also preempted Bernanke a bit, and people are waiting to see some more details from his plan."

JEOFF HALL, CHIEF NORTH AMERICAN ECONOMIST, THOMSON IFR, BOSTON:

"We're going on a program where they're going to cut 25 basis points and then I would support a pause. If there is no impact on the real economy then the Fed has no business cutting aggressively. But they stand ready to act if needed and we need that reassurance."