Markets have gone into reverse after US Federal Reserve chairman Ben Bernanke warned the US recovery was softer than had been expected, and said he was prepared to take further steps to boost the economy.
As soon as his comments - being delivered to the Jackson Hole meeting in Wyoming - were released, Wall Street headed lower and dragged the UK equity market down with it. The Dow Jones Industrial Average, up around 30 points before the comments following better than expected US GDP revisions, is now down a similar amount, while the FTSE 100 is off 24.40 points at 5131.44. Bernanke said:
The incoming data suggest that the recovery of output and employment in the US has slowed in recent months, to a pace somewhat weaker than most FOMC [Federal open market committee] participants projected earlier this year.
Despite the weaker data seen recently, the preconditions for a pickup in growth in 2011 appear to remain in place.
On further support for the economy, he said:
The committee is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly.
At this juncture the committee has not agreed on specific criteria or triggers for further action.
