Bernanke Speaks on Friday, Great Expectations

 
When the Federal Reserve chairman will speak at its annual meeting in Jackson Hole, Friday, the markets will be looking for something that would indicate if there are any new stimulus measures being created. Only a year ago, after all, the economy was almost exactly the same position: slow job growth, slow growth of output, fears of falling into another financial shock in relation to the debt crisis in Europe, warning of a double-dip recession . And a year ago in this same conference, the Fed chairman, Ben Bernanke, had acutely described all the weapons that the Fed had at his disposal to save the economy.

Several months later, the Fed has opened its "arsenal" and started to put together a major program of asset purchases aimed at stimulating growth.

Given the reluctance of Congress to engage in a major fiscal stimulus, and is planned to decrease spending, analysts and investors are wondering if history does not repeat itself, especially if the economy deteriorates further. Equity markets have experienced a rise in the week, partly on hopes that Bernanke might be a sign of more monetary stimulus on the road, or at least that would indicate such stimulus conditions would most likely put in place.

Among the options that Bernanke and can tell the public this Friday, there is another round of major asset purchases, or another quantitative easing, which aims to reduce long-term interest rates, lowering the rate of interest that the Fed pays banks for their reserves, or extending the average maturity of the Fed's current portfolio analysts are eagerly awaiting this action and the decision that will follow.

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