Ben Bernanke fails to deliver fresh stimulus, disappointing markets

By DOMINIC JEFF
Published on 18/07/2012 00:00

WORLD markets expressed disappointment after US Federal Reserve chief Ben Bernanke failed to deliver a hoped-for hint of fresh stimulus.

Traders had been expecting Bernanke’s to tell the US Senate banking committee that he would react to the recent slew of negative economic data by unleashing a third round of quantitative easing, or “QE3”.

WORLD markets expressed disappointment after US Federal Reserve chief Ben Bernanke failed to deliver a hoped-for hint of fresh stimulus.

Traders had been expecting Bernanke’s to tell the US Senate banking committee that he would react to the recent slew of negative economic data by unleashing a third round of quantitative easing, or “QE3”.

But the Fed chairman limited himself to saying that he remained “prepared to take further action”, adding that economic recovery was held back by Europe’s debt crisis and uncertainty on US fiscal policy.

In London the FTSE 100 Index, already in the red, took a further dive once the speech was delivered. US markets opened lower despite a number of major corporations reporting results that were ahead of Wall Street’s expectations.

Angus Campbell, head of market analysis at Capital Spreads, said markets were left unimpressed following days of build up. “There was little that the markets didn’t know about in his statement as he highlighted areas of concern, yet at the same time kept his cards close to his chest in terms of mentioning the letters ‘Q’ and ‘E’,” he said.

“This meant that equities were quickly left unloved and all the pent up optimism was swiftly unwound.”

The Fed has held overnight borrowing costs near zero since December 2008 and has bought $2.3 trillion (£1.5tn) in government and mortgage-related debt in two waves of quantitative easing.