David Gonski Is Amazed At The Market's Response To QE Tapering

David Gonski: CeBIT Australia

Future Fund chairman David Gonski is amazed that the market reacted so violently when Ben Bernanke announced plans to dial back US quantitative easing measures last week.

The announcement sparked more global market volatility and drove the AUD down to its current value of $US0.93 within hours.

Gonski told the Financial Services Council today that the Future Fund – like other large Australian investors – had been preparing for QE tapering from the outset.

Here’s what he said:

We do not do our planning on the basis that we know everything. Like banks, we scenario plan: we see what would happen if certain things occurred.

Many of you [in the FSC] would probably be amazed at how excited everybody got at Bernanke’s and others’ statements that the drug may be turned off.

Let me assure you, at the Future Fund, we’ve been scenario testing that ever since the drug was turned on.

When I think about it coming from a medical family, when your heart is packing up they put you on a bypass. You’re getting well when they start to slow the bypass down.

Ladies and gentleman, we are testing that – as I’m sure you all are – testing what would happen as we move towards more normal settings and what that means to our investments.

Now read: Australia’s Future Fund Has Made Billions Off The Fall Of The AUD

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