"What's the rush. You've tried to back away for how many years, and each time you've made a mistake. You have no inflation pressure, and you have very little risk from letting [QE3] run for one more quarter. "
- Steve Ricchuito, chief economist for Mizuho Securities USA
This week Ben S. Bernanke will have the final opportunity to provide his own spin on the seven-year run leading the U.S. central bank, as well as starting tapering the stimulus programme or at least shed some light on future steps. Wednesday's meeting will be the last chapter of the "Helicopter" Ben's era, as on Friday the Senate is likely to confirm Janet Yellen as the next Fed's Chairman. Currently, 34% of analysts involved in Bloomberg's survey believe Bernanke will start tapering the QE this month, compared with just 17% in November. Nonetheless, each fundamental report has bigger weight than usual, as it can play the decisive role in Bernanke's decision. The industrial output in the United States rose 1.1% in November, up from an upwardly revised 0.1% in the preceding month, beating analysts' forecasts of a 0.6% gain. Additionally, the capacity utilization went up to 79%, compared with 78.2% in October, which was also revised higher. Manufacturing PMI, however, stood at 54.4 in December, falling 0.6 points short of analysts' predications.
While both housing and labour market are on the mend and sending welcoming signs, everything is likely to depend on the question whether the weak inflationary pressure is a sufficient reason for the Federal Reserve to postpone the anticipated decision. The uncertainty surrounding financial markets is suggesting investors will not be surprised if the Fed continues the QE with no adjustments.
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