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Bernanke says no QE3 planned

Ben Bernanke.jpgThe chairman of the US Federal Reserve, Ben Bernanke, has issued a sober update on the current state of the US economy.

Expressing his disappointment that growth this year "has been somewhat slower than expected", he then listed a number of key problem areas:

• "Supply chain disruptions" caused by the Japan disaster
• "The jobs market remains quite weak"
• "All segments of the construction industry remain troubled"
• "State and local governments continue to cut spending and employment"

And he added that:

"Households are facing some significant headwinds, including increases in food and energy prices, declining home values, continued tightness in some credit markets, and still-high unemployment, all of which have taken a toll on consumer confidence".

The key question for Wall Street was, of course, whether he would indicate that QE3 would now be unveiled. This would pour more liquidity into the markets to support the high speed traders, and their friends on the commodity desks, in pushing oil and other commodity prices higher.

Yet this was always unlikely. The Fed has spent $600bn of taxpayers' money on QE2 since Bernanke launched the concept last August. And even he accepts that the economy is still a long way from full recovery.

After all, as the famous scientist Albert Einstein noted: repeating the same action, and expecting a different result, is a good definition of lunacy.

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