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Following the Jackson Hole symposium, market attention will be focused on the speeches by Ben Bernanke, Jean-Claude Trichet and Christine Lagarde. Golf used to have its “big three” – Nicklaus, Palmer and Player – and these three officials are clearly the equivalent among economic officials in the world today. With the developed economies apparently still failing to recover from the Great Recession, did they offer a co-ordinated blueprint for action? Not really.
The Bernanke speech disappointed some observers by failing to make the case for further near term easing by the Fed. That seems unfair. The FOMC announced a significant policy shift only three weeks ago, when it provided a forward commitment to keep short rates at exceptionally low levels for the next two years. That was enough to split the committee, and the Fed chairman has extended the next FOMC meeting on September 20th and 21st to allow full discussion of all the options. He clearly felt unable to offer any unambiguous signals before that important meeting. Read more