This time last year brought forth the Federal Reserve’s announcement that it would embark on a second round of quantitative easing (QE2), leading to the subsequent pumping of $600 billion in newly printed greenbacks into the economy. This Friday, Fed Chairman Ben Bernanke will again address the public from Jackson Hole, Wyo., to unveil new efforts to repair the economy.
QE2 was expected to bolster financial markets and bring the U.S. economy out of its downward spiral, but the result was an inflation-induced spike in commodity prices that lead to gold’s $1,900 per ounce peak last week. Bernanke is expected to deliver a speech on Friday that will outline little change in the Federal Reserve’s current policy. The Wall Street Journal reports that there is no reason to expect a third round of quantitative easing (QE3) being unleashed on the economy.
The Financial Times suggests the title of this year’s speech, “Near and Long-Term Prospects for the U.S. Economy,” is an indicator that Bernanke will shy away from addressing the effect the Federal Reserve has had on the economy recently, instead opting to talk about the future of the economy.
While QE3 is not imminent, it is still a possibility, according to reports. High inflation has lessened worries Bernanke may have about a sudden price drop, thus leaving the option on the table.