Bernanke signals second US stimulus plan
Saturday 16 October 2010
Ben Bernanke yesterday gave his clearest signal yet that the US is set to restart its quantitative easing programme as the world's biggest economy struggles to emerge from the recession.
With low inflation – core inflation is at a 50-year low – and persistently high unemployment, America is struggling to shake off the effects of the downturn, with the Federal Reserve chairman hoping that a fresh injection of capital will help to stimulate growth. Speaking at a meeting of the Boston Federal Reserve, Mr Bernanke said: "There would appear, all else being equal, to be a case for further action.
"Although output growth should be somewhat stronger in 2011 than it has been recently, growth next year seems unlikely to be much above its longer-term trend. If so, then net job creation may not exceed by much the increase in the size of the labour force, implying that the unemployment rate will decline only slowly."
The next meeting of the Federal Open Market Committee, which sets interest rates and the level of quantitative easing, is scheduled for the first week of November.
"All things being equal I expect we will see the Fed add a minimum of $500bn into the US money supply in an effort to secure the US recovery and make sure the recession is not a double-dip and more of single-scoop," said Jeremy Cook of currency brokerage World First.
Any resumption of buying up US government bonds and commercial paper is likely to weaken the dollar, fuelling fears of greater tension with China over currency values. More QE would make US exports more competitive against Chinese goods, which would be welcomed by US exporters.
Sales of the tablet are set to fall again say analysts
World's most lethal spider found under a bunch of bananas
British supermodel and hitmaker join forces to launch a 'huge song'
I Am Bread could actually a challenging and nuanced title
Rumours that the star wants to move on to pastures new
- 1 Jack the Ripper: Scientist who claims to have identified notorious killer has 'made serious DNA error'
- 2 Ebola outbreak: What is bushmeat – and is it to blame for the disease that has killed thousands?
- 3 Star Wars memorabilia called a 'bit of plastic' on Antiques Roadshow by Fiona Bruce valued at £50,000
- 4 Meet Thea, Norway's 12-year-old child bride
- 5 Russell Brand might seem like a sexy revolutionary worth getting behind, but he will only fail his fans
Kobani: Fifteen-year-old boy taken captive with suspected jihadist 'shot in the head by militant group' fighting against Isis
Ebola outbreak: What is bushmeat – and is it to blame for the disease that has killed thousands?
Isis fighters 'crucify' 17-year-old boy in Syria
Oscar Pistorius sentencing: Olympic star must serve 10 years, prosecutor urges
Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Sorry Judy Finnigan – Ched Evans is no less sickening than an alleyway rapist
Residents should throw a street party and mix with immigrant neighbours, councils told
Workers 'could be forced to pay £5 a week' to get benefits
Russell Brand threatened with arrest after filming outside Fox News headquarters
Amal Alamuddin calls for the return of the Elgin Marbles from Britain: 'Injustice has persisted for too long'
iJobs Money & Business
£60 - 65k + Benefits: Guru Careers: We are seeking a ASP.NET Web Developer / ....
£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...
£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...
£50000 - £55000 per annum + bonus + benefits: Ashdown Group: IT Relationship M...