“With the unemployment rate still high and declining only gradually in the face of inflation that continues to remain below the Committee's long-term objective, a highly accommodative monetary policy remains appropriate for the foreseeable future”. Once again Ben Bernanke, the number one of the Federal Reserve, takes care of reassuring the international financial markets, which today were not a little nervous waiting for his hearing in the US Congress.
"Reducing quantitative easing," that is, monetary stimulus, "is not on a fixed path," Bernanke wrote in his speech to the plenary. In other words, it will depend on the trend of the American economy; but given current conditions and still high unemployment “ultra accommodative policy is appropriate for long”, continuing along the lines of his latest “dove” statements.
Bernanke had announced the gradual suspension of the 85 billion a month bond purchase program starting from the end of 2013, to arrive at its definitive interruption next year. The announcement had triggered heavy corrections in liquidity-drugged markets, with investors fearful of losing Fed support, but the shot had been narrowly corrected with various reassurances.
Compared to these declarations, European issues fade into the background. The EU lists, initially weak, are strengthened also thanks to the positive quarterly results of Bank of America and Yahoo!. Frankfurt rises by 0,3%, Paris by 0,4% and London recovers parity. Piazza Affari is doing even better, where the Ftse Mib earns 1,5% supported by the banks. The American governor's words also changed the mood on Wall Street, where weak futures moved into positive territory.
Yesterday evening the New York Square closed weakly abandoning the recent record levels: the Dow Jones lost 0,21%, the Nasdaq 0,25% and the S&P 500, weighed down by Coca Cola's accounts, 0,37%. On the real estate front, applications for US mortgages decreased by 2,6% in the last week. The start-ups of construction sites for new housing units in June were also down sharply (-9,9%) as were permits (-7,5%) for new buildings.
Bernanke also sent out optimistic signals about the future of the economy: “Risks to the economy have diminished since last fall” and although the economy itself "remains vulnerable to external risks and fiscal factors", the improvements observed are due to the "significant" contribution of the residential real estate sector. According to the head of the US central bank, the positive trend in the real estate sector "is probably destined to continue despite higher mortgage rates".
