Ben Bernanke sent a strong signal that the US Federal Reserve is not planning to loosen monetary policy despite weaker economic data, saying that the recovery “appears to be proceeding at a moderate pace”.
“The US economy is recovering from both the worst financial crisis and the most severe housing bust since the Great Depression, and it faces additional headwinds ranging from the effects of the Japanese disaster to global pressures in commodity markets,” the Fed chairman said in a speech in Atlanta on Tuesday. “In this context, monetary policy cannot be a panacea.”
Mr Bernanke’s comments will dash market hopes that the Fed might launch a third round of quantitative easing – nicknamed QE3 – in response to weak numbers on growth and the labour market recently.