Thread: FBS: All attention to Bernanke’s Wednesday press conference

The first regularly scheduled press conference of the Fed’s Chairman Ben Bernanke will take place on Wednesday when the head of US central bank will answer the journalists’ questions.

Among the questions that interest investors most of all are if the recent spikes in consumer prices are regarded only as temporary and whether quantitative easing in the US will finish as scheduled at the end of June. If Bernanke shows any signs of concern about inflation, the market will interpret this as a signal that the rates will be lifted up rather sooner than later.

Annual inflation pace in the US rose form 2,1% in February to 2,7% in March, while the economists were looking forward only to the advance to 2,6%.

Analysts at Daiwa Capital Markets think that Bernanke will say that the US economy hasn’t reached yet the Fed’s targets of both inflation and employment, so the approach of the monetary authorities has to be loose. The Fed’s chief is likely to indicate that the central bank is aware of risks of such policy and is closely monitoring the situation being ready to act when necessary.

Strategists at RBS Securities are going to watch the reaction of risk asset prices. In their view, stock and commodity indexes are likely to rise on more dovish comments. On the other hand, if the Fed hints at the exit strategy risk assets will lose.

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