The long-awaited Jackson Hole symposium turned out to be a non-event with Fed Chairman Ben Bernanke not signaling additional quantitative easing measures in his speech. Yet, this had not driven much disappointment. Wall Street reversed initial losses and ended the day 1-1.5% higher. Bernanke's speech sent an indication that the US economy is not too bad and his view of long-term outlook is 'more optimistic'. More importantly, the Chairman said that the Fed 'has a range of tools that could be used to provide additional monetary stimulus' and the September FOMC meeting will 'allow a fuller discussion' on the economic outlook and Fed's actions.
At his speech titled 'The Near and Longer-term Prospects for the US Economy', Bernanke focused little on the near-term outlook but more on the long-term prospect. The Chairman did not discuss easing options. Rather, he said the FOMC meeting in September will be a 2-day, instead of a one-day, one so that policymakers can have a 'fuller discussion' on economic and financial developments, as well as stimulus tools. Bernanke did spend some time in talking about fiscal issues. He stated that 'US fiscal policy must be placed on a sustainable path that ensures that debt relative to national income is at least stable or, preferably, declining over time. He added that recent negotiations on debt ceiling has probably 'disrupted financial markets' and the economy and 'the country would be well served by a better process for making fiscal decisions'.
Our economists retained the view that the Fed need to roll out additional easing measures to bolster the economy. The Jackson Hole speech, however, allowed the Fed to buy more time for more considerations and gather more evidence that the economy is moderating.
By
M.Zohaib Gadit
Forex Trading Consultant
At his speech titled 'The Near and Longer-term Prospects for the US Economy', Bernanke focused little on the near-term outlook but more on the long-term prospect. The Chairman did not discuss easing options. Rather, he said the FOMC meeting in September will be a 2-day, instead of a one-day, one so that policymakers can have a 'fuller discussion' on economic and financial developments, as well as stimulus tools. Bernanke did spend some time in talking about fiscal issues. He stated that 'US fiscal policy must be placed on a sustainable path that ensures that debt relative to national income is at least stable or, preferably, declining over time. He added that recent negotiations on debt ceiling has probably 'disrupted financial markets' and the economy and 'the country would be well served by a better process for making fiscal decisions'.
Our economists retained the view that the Fed need to roll out additional easing measures to bolster the economy. The Jackson Hole speech, however, allowed the Fed to buy more time for more considerations and gather more evidence that the economy is moderating.
By
M.Zohaib Gadit
Forex Trading Consultant
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