8th June 2011
“The US economy is recovering from both the worst financial crisis and the most severe housing bust since the Great Depression, and it faces additional headwinds ranging from the effects of the Japanese disaster to global pressures in commodity markets."
“In this context, monetary policy cannot be a panacea.”
US markets had hopes that the Fed might launch a third round of quantitative easing – nicknamed QE3 – in response to weak numbers on growth and the labour market recently.
On the BBC News website Bernanke says the US economic recovery will rebound in the coming months.
On Bloomberg it is reported that Treasury two-year note yields dropped two basis points, or 0.02 percentage point, to 0.4 percent yesterday in New York, the lowest level this year. The Standard & Poor's 500 Index fell 0.1 percent to 1,284.94 after rallying as much as 0.8 percent.
In his blog Shaun Richards explains what Bernanke's comments mean for investors.
Richards also looks in-depth in to what comes out of Bernanke's speech, with the view that "whilst further monetary easing or QE3 is not especially likely right now it could only be a few months away if the US unemployment/employment situation continues to stagnate or weakens further." He suggests that inflation, commodity prices, Japanese crisis etc will not be a main issue for Bernanke when looking in to a new bout of QE, employment figures will be the main concern.
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