Don't Hold Your Breath for New Fed Stimulus

Investors might be barking up the wrong tree

By Kevin Spak,  Newser Staff

Posted Aug 24, 2011 7:51 AM CDT

(Newser) – Stocks have been shooting up this week on speculation that Ben Bernanke will announce another round of quantitative easing to prop up the economy in his speech Friday at Jackson Hole. But investors had better hold their horses, Neil Irwin of the Washington Post reports, because “the appetite within the Fed for another big, splashy round of so-called QE3 is low,” and they want more evidence before making their next move.

Irwin doesn’t cite any sources (anonymous or otherwise) for this insight. But he writes that many Fed members are skeptical that more bond purchases will really spur growth, and that there’s resistance “from Bernanke down” to anything more drastic. Bernanke’s speech is more likely to take the long view of the US’ economic health, and include talk of lowering the deficit—it’s even titled “Near- and Long-Term Prospects for the US Economy.”

Ben Bernanke participates in a Senate Banking, Housing and Urban Affairs Committee hearing on Capitol Hill, on July 21, 2011.
Ben Bernanke participates in a Senate Banking, Housing and Urban Affairs Committee hearing on Capitol Hill, on July 21, 2011.   (Getty Images)
Federal Reserve Chairman Ben Bernanke testifies on Capitol Hill, July 13, 2011.
Federal Reserve Chairman Ben Bernanke testifies on Capitol Hill, July 13, 2011.   (AP Photo/Carolyn Kaster)
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