FED, Took No Decision Today

FED, Took No Decision Today

Ben Bernanke had a very clean speech, emphasizing all the possible scenarios and the correspondent solutions. He didn’t said that the QE3 is going to be ended at a certain point for sure but neither he said that QE3 will continue for an undetermined period. The key factors of this equation are the signals of the American economy, especially the labor market and inflation. Lately, the U.S. enjoyed positive results and the rising star that lead to such positive news is the housing market.

As for the rest of the year, “a highly accommodative monetary policy will remain appropriate for the foreseeable future”. At a certain point, trying to soften the effects of its last speaking, Ben Bernanke gave the impression that the indulgent measures are of need so the QE3 program and the “forward guidance” represent the main 2 tools which need important reasons before being removed (key levels are expected in the labor market <<6.5%>> and inflation <<near the 2% target>>).

In order to properly end his speaking, Ben Bernanke wanted to notify the investors that “the Committee would be prepared to employ all of its tools, including an increase in the pace of purchases for a time, to promote a return to maximum employment in a context of price stability.”

If we are to compare the pro QE3 attitude of Ben Bernanke today and the contra QE3 ideas that Esther George transmitted yesterday ,as a representant of half of the FOMC members, which would be the most probable scenario? We should wait the tomorrow’s report where the chairman of Fed is expected to take a more clear position.

 

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