Ahead of a crucial speech, Federal Reserve Chairman Ben Bernanke may not be ready to take the plunge into a large-scale asset purchase program the central bank has admitted is under consideration.
Thatâ€™s because he has yet to forge consensus of fellow policy makers that more purchases make sense.
â€œHe doesnâ€™t have the mandate to unveil or drop huge hints about quantitative easing,â€ said Scott Anderson, chief economist at Bank of the West in San Francisco.
For the past month, the Fed has been â€œlike a diver eyeing the pool from the edge of the diving board, but canâ€™t seem to get themselves to move,â€ Anderson said.
The marketâ€™s expectations about Fed policy has veered in recent weeks.
Prior to the central bankâ€™s last meeting on July 31-Aug. 1, economists thought the Fed would ease.
But Bernanke & Co. took no action other than to say they were â€œclosely monitoringâ€ the economy.
As incoming data seemed more upbeat in the days following the decision, many Fed watchers said they thought the Fed would hold off from further easing in September. But then last week, the minutes of the Fedâ€™s meeting showed that â€œmanyâ€ Fed officials were poised to ease.
Fed officials have been â€œall over the placeâ€ about monetary policy, said James Glassman, economist with J.P. Morgan Chase.
In light of the confusion, all eyes are on Bernankeâ€™s remarks at 10 a.m. Eastern on Friday morning from the Fedâ€™s summer retreat in Jackson Hole, Wyo.
â€œOur sense is that too many people are going in expecting too much from this speech,â€ said Tom Porcelli, chief U.S. economist at RBC Capital Markets.
He said he expects a speech â€œthatâ€™s long on talk about the options and short on timing.â€
Allen Sinai, chief executive officer of Decision Economics Inc., said Bernanke will make it â€œcrystal clearâ€ that the Fed is going to embark on another round of easier monetary policy.
But the Fed chairman will not specify during his remarks what kinds of easing will be forthcoming.
â€œI donâ€™t think he will rule QE3 in or out,â€ Sinai said.
This might cause some disappointment to financial markets but it should be minimal given Bernankeâ€™s pledge to act, Sinai added.
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