It has been a year since Ben Bernanke threw his last big bone to Wall Street: The announcement at last year’s Jackson Hole schmooze-fest that the Fed had a number of options at its disposal to stimulate the economy.(Translation: We’re launching QE2).
Bernanke’s speaking at this year’s Jackson Hole this Friday. Wall Street is speculating—or at least praying—that the Fed Chairman will say something similar this year.
This seems a reasonable bet. Bernanke tends to freak out whenever markets tank, and the last month of ~15% declines has wiped $8 trillion off the value of global stock markets.
On the other hand, QE2 was a bust, and Bernanke has already recently promised that the Fed will keep short-term interest rates at zero until 2013. And inflation has been ticking up. So maybe the Fed chairman will hold firm.