Stock markets braced for Ben Bernanke’s Jackson Hole speech

All eyes on the Federal Reserve chairman amid expectations he could signal the start of a third round of quantitative easing Financial markets were braced for a keynote speech from Ben Bernanke at Jackson Hole on Friday, amid hopes that he could unveil new measures to kickstart the sluggish American economy. All eyes will be on the US Federal Reserve chairman when he steps up to deliver his annual speech in the remote resort in the mountains of Wyoming. Last year he used the forum to fire the starting gun for a second round of quantitative easing. Not everyone is convinced that Bernanke will be able to deliver. Markets started the week confidently predicting the Fed chairman would unveil a third round of asset purchases, but expectations have been scaled back in recent days. “It is extremely unlikely he will do anything similar this year and if markets think that he will, they could be in for a big disappointment,” said Michael Hewson, market analyst at CMC Markets. “To start with, inflation is much higher, which makes it much more problematic, not withstanding the different political climate that the US is now operating in with the Tea Party movement. There is also the small matter of the three dissenters on the Federal Open Market Committee [which determines monetary policy], compared to only one last year. He can’t just ignore them and he would be foolish to do so.” Rob Carnell at ING said: “We take the view that this speech will not provide the clear guidance for policy that some market participants wish to see, and at best, will contain some general words of comfort and support, without anything material to back them up.” Stock markets are expected to mark time until Bernanke steps up to deliver his speech at 3pm British Summer Time. Oil prices were flat, the dollar slipped and many Asian stock markets were little changed. The dollar came off a two-week high against the yen but was expected to recoup losses amid expectations that the Fed would not signal strong economic stimulus. Currency analysts at Barclays Capital said: “Disappointing news is likely to favour the dollar over all other safe havens. Positive news should boost the euro and even the yen.” The pound has taken a pummelling in the past few days, dragged down by disappointing data on consumer confidence and high street sales on Thursday. “It is hoped that today’s UK second-quarter GDP revision will arrest the decline with expectations that growth will remain unchanged at 0.2%, though there is a small chance it could well be revised upwards,” said Hewson. “In any case the growth still remains better than France and Germany’s combined for the second quarter.” The UK GDP figures are due at 9.30am, but will be based purely on output and will not contain estimates for consumer and government spending. Later on it is the US’s turn for second-quarter GDP numbers, with expectations that the preliminary estimate of a 1.3% annualised rate could be downgraded to 1.1%. Brent crude was flat at $110.69 a barrel on Friday morning while US crude slipped 29 cents to $85.01. Oil prices were on track for a gain of more than 2.5% this week, with US crude gaining after four weeks of losses. US economy Ben Bernanke Economics United States Quantitative easing Julia Kollewe guardian.co.uk

Posted by on August 26, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.