Bernanke on wednesday had not ruled out a gradual exit from the extremely loose monetary policy of the u.S. Central bank fed before the end of this year. The fed chief wanted to avoid any speculation about his own future.
Bernanke avoided clear predictions on monetary policy: everything depends on the development in the next few months. "Our policy is in no way predetermined and depends on incoming data and forecasts," bernanke said.
All stock exchanges reacted negatively to bernanke’s comments. The nikkei index in tokyo lost 1.74 percent, the dow jones industrial continued its downward movement of the previous day on thursday, losing almost 1.4 percent by midday (local time). The day before, the dow had already fallen by 1.35 percent after the eagerly awaited statements of the fed.
The concerns about a possible curbing of the loose U.S. Monetary policy and chinese economic data pushed the dax on thursday deep into the minus. The benchmark index closed 3.28 percent lower at 7928.48 points, the lowest level since the end of april.
The rotating U.S. Federal reserve press has been feeding the stock market for years: the fed buys $85 billion worth of bonds a month to support the economy. Since the severe financial crisis of 2008, interest rates have been at a historic low of zero to 0.25 percent. The nervousness that is currently sweeping the markets is based primarily on the question of whether an end to liquidity could stifle the tender shoots of economic activity.
Should economic data turn out as expected, a first reduction in purchases "later this year" is possible, bernanke said. After that, they were gradually reduced and completely stopped in mid-2014. However, the central bank was not allowed to change its interest rate policy in the long term. There had previously been conflicting signals from fed circles about the future course of monetary policy.
To allay concerns about an end to the downturn, bernanke sought figurative language: "to use a car-driving analogy, any slowdown in bond sales is a bit like taking your foot off the gas pedal while the car is accelerating – but not starting to step on the brake."
Bernanke’s comments are actually a sign of a recovery in the u.S. Economy and thus good news – however, according to some economists, the fed’s countermeasures on the markets acted like a drug that is now being withdrawn.
In the USA, economic signals show a slight improvement. The composite index of leading economic indicators rose 0.1 percent in may compared with the previous month, according to the private research institute conference board on thursday.
The fed chief also pointed to progress in the labor market. Overall, the risks to the economy had improved since last fall, according to a release from the fed’s open market committee, published at the end of a two-day meeting. Nevertheless, the unemployment rate remains high – currently at 7.6 percent. In order to trim a stronger recovery, the bond sales were therefore continued ahead of schedule.
Oil prices also came under heavy pressure on thursday. A barrel (159 liters) of north sea brent for august delivery fell to 102.95 US dollars by late afternoon. This was 3.17 dollars less than the day before. The price of a barrel of US west texas intermediate (WTI) for july delivery fell by 2.88 dollars to 95.36 dollars. Commerzbank spoke of "panic selling" on the commodity markets. The price of a fine ounce of gold fell below the 1300 US dollar mark for the first time since september 2010. The last price of the ounce was 1226 dollars, 57 dollars less than the day before.