The US Federal Reserve chairman Ben Bernanke has indicated that the central bank will not take any immediate action to stimulate the US economy.
The widely anticipated Jackson Hole speech reiterated that the Fed had a “range of tools that could be used to provide additional monetary stimulus”.
One of those tools is quantitative easing. The markets were hoping that today would signal the start of a third round of quantitative easing in the US, known as QE3.
The Bernanke speech comes on the same day that US economic data for the second quarter of 2011 was revised downwards slightly.
This shows that the US economy grew by a slower than expected 1% in the third quarter, down from an initial estimate of 1.3%.
There were some indications in the Bernanke speech that QE3 could still be an option to be implemented later this year.
The next meeting of the US central bank in September will last for two days, rather than the usual one day meeting.
Closer to home, the Gross Domestic Product (GDP) figure for the second quarter remained unchanged from the original estimate, with the UK economy growing by 0.2% between April and June.
Investors clearly remain nervous due to weakening economic data around the world and the continued uncertainty surrounding eurozone sovereign debt.
A clear statement from Ben Bernanke today on the direction of US monetary policy would have helped lift investor sentiment. Investors will have to wait a little while longer for good news.
Photo credit: Flickr/Medill DC
