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August 7, 2011 6:15 pm
Economic Outlook: Fed meets amid talk of QE
By Neil Dennis
Many of the world’s leading central banks are softening their monetary stance as global debt and growth concerns have spooked financial markets in recent weeks. Against this backdrop, the Federal Reserve holds its latest policy meeting on Tuesday, while the Bank of England publishes its quarterly inflation report on Wednesday.
Talk has returned to the subject of quantitative easing, and the possibility of a third round of monetary stimulus (QE3). Little is expected from Tuesday’s meeting given the proximity of the Fed’s annual conference at Jackson Hole at the end of the month. It was at the 2010 meeting at the Wyoming ski resort that Ben Bernanke, Fed chairman, announced QE2.
Most analysts expect the Bank of England to revise down its growth forecast given recent market dislocations. In its report published in May, the Bank was still expecting annual growth of 1.8 per cent, but after the tepid 0.2 per cent growth in gross domestic product recorded in the second quarter, increases of more than 1 per cent would be needed in both of the remaining quarters to achieve this.
“Although the fall in oil prices will help cash-strapped households, there is a risk of a vicious downward spiral developing, with falling asset prices prompting the global economy to continue to weaken,” says Vicky Redwood at Capital Economics.
In spite of recent rises in utility bills, the Bank is expected to signal that medium-term inflation pressures have eased and that a near-term interest rate rise is not on the cards.
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(dame una pista amigacho)
.... y no precisamente del bolsillo de los comprados...