(US) Fed Chairman Bernanke: key question for the Fed is whether growth will be strong enough to make further progress on lowering unemployment – (Q&A)
How to interpret this speech?
Fed Chairman Bernanke has once again dazzled Capital Hill and avoided to provide any answer to the pressing question of QE3. However, it does seem that recently Bernanke and other Fed officials are considering the possibility of another round of Quantitative Easing, which is a contrast from their prior comments that often called QE3 as “highly unlikely”.
In today’s testimony, Bernanke stated that unemployment improvement could be limited if growth remains near potential 2% (1.9% GDP y/y from Q1 2012), and it is “something we need to think about”, and continued to say that nothing is off the table although at this time both European and Chinese economies have slowed down, along with the “fiscal cliff” of the tax cut expiration in the U.S looming over the market…
I believe market is definitely disappointed after the testimony as Bernanke did not explicitly call for QE3, but with the acknowledgment of global economic slowdown and the reiteration that the Fed has several options, Bernanke could be hinting for some kind of Fed action in the future…
Fed Chairman Bernanke: Prepared To Adjust Portfolio (CODENAME: QE3?)
June 7, 2012 by 6 Comments