(US) IMF’s Lipton: Fed Chairman Bernanke’s remarks show that the Fed is prepared to do its part- Fed has room to maneuver if things worsen.
(US) FED CHAIRMAN BERNANKE: WOULD NOT RULE OUT FURTHER ASSET PURCHASES, MORE ACCOMODATION TO BE OFFERED AS NEEDED TO AID GROWTH; GAUGING IMPACT OF QE ON THE US ECONOMY IS DIFFICULT – JACKSON HOLE SPEECH
How to interpret Bernanke Jackson Hole Speech?
First of all, the entire speech is available online at Federal Reserve’s official website, here is the link.
I believe that Bernanke has effectively disappointed the market by offering nothing new in this speech, although he did end the speech with the following:
Some analysts argue that Bernanke has signaled for more easing, and in that general sense, I would agree; however, the timing is what’s important here, and the very fact that no explicit Fed actions were announced today points to no QE announcements in the near term. Let’s face it, the Federal Reserve will never surprise market intentionally with unscheduled QE announcements, unless the economy is at the brink of collapse. With the Presidential election coming up in November, the September 13th FOMC Meeting will be the last opportunity for the Feds to make any significant announcement…
With all things considered, I am leaning towards no QE3 for 2012. Whether or not the Feds will launch QE3 in 2013 still remains to be seen, but that’s too far away to worry about. The only event that could change this view is the upcoming Nonfarm Payroll (NFP) next Friday September 7th; if the figure comes in significantly lower, such as below 50K, it could act as a trigger for more easing because such a low release is essentially a smoking gun to justify QE3; on the other hand, an over 100K release practically guarantees no QE3 for 2012, and we should see some strength in the USD especially against JPY and CAD.
Post Bernanke Jackson Hole Speech Analysis
August 31, 2012 by Leave a Comment