To QE or Not to QE?

An analysis of what to expect from Ben Bernanke when he takes the stage in Jackson Hole on Friday

Kathleen Brooks 30 August, 2012 | 12:04AM

This article is part of Morningstar's "Perspectives" series, which is a series of articles written by third-party contributors. Here, Kathleen Brooks from FOREX.com outlines what to expect from Ben Bernanke's speech on Friday.

This Friday 31 August at 3PM (10AM EDT) the chairman of the Federal Reserve Ben Bernanke will make a speech at the Federal Reserve’s annual central bankers’ symposium at Jackson Hole, Wyoming. This speech has been used by Bernanke in previous years to discuss the potential trajectory for US monetary policy, thus his speech is eagerly awaited by the financial markets.

What Could Bernanke Say?

The economic recovery in the US is fragile, the global situation is still concerning – the eurozone crisis is not over and China is still showing signs of slowing down – and crucially for the Fed the labour market has not picked up at the pace  considered necessary to bring the unemployment rate down. In his 2010 speech at Jackson Hole, Bernanke referenced the poor state of the economy and hinted that the Fed would embark on quantitative easing (QE) or asset purchases to stimulate the economy. Be clear: Bernanke will not announce new policy measures during this speech, the most he can do is point to potential future policy options that  the Fed could agree on at the September or November Federal Open Market Committee (FOMC) meetings.

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About Author

Kathleen Brooks

Kathleen Brooks  is research director at FOREX.com, which is a part of GAIN Capital. 

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