US stocks dip after Fed’s Bernanke talks down QE3
STOCKS in the US dropped last night after Federal Reserve chief Ben Bernanke acknowledged a slowdown in the economy, but offered no suggestion of a third round of quantitative easing (dubbed QE3).
The Dow Jones industrial average fell 0.16 per cent to end at 12,070.81, while the Standard & Poor’s 500 Index slipped 0.09 per cent, to finish at 1,284.94. The Nasdaq composite index shed 0.04 per cent, to close at 2,701.56.
Bernanke noted “slower than expected” growth this year and “frustratingly slow” progress in the labour market, yet remained defiant over the Fed’s controversial asset-buying programmes (QE and QE2).
“The Fed’s actions in recent years have doubtless helped stabilise the financial system, ease credit conditions, guard against deflation, and promote economic growth,” Bernanke concluded. Growth “seems likely to pick up in the second half of the year”, the Fed expects. Yet conditions are still bad enough “to warrant exceptionally low” interest rates, Bernanke stressed.
Inflation, which has reached around 3.5 per cent in the US, is the result of “transitory” factors beyond the Fed’s control, Bernanke insisted.
Commodity prices will ease as global supply picks up, with oil prices unlikely to spike again, he said.