Judgement day: the Fed chairman decides fate of US stimulus programme

An anxious waiting game.

The world stock markets are shaky as investors are cautious amid growing concerns that the US Federal Reserve may halt its favourite economic stimulus programme earlier than expected.

The US stocks opened lower this week, after reaching all-time highs last week. Now, financial media and analysts are putting the weak market down to a lack of economic security, after Fed officials suggested that the Federal Reserve might taper its bond buying programs.

Since September, the central bank has printed $85bn a month to purchase Treasuries and mortgage-backed securities, a policy known as quantitative easing. The programme’s life is contingent on the strength of the economy – the Fed is committed to ending it as soon as it detects substantial improvement in the outlook for US employment.

That said, it is no surprise that all eyes are on Fed Chairman Ben Bernanke, who is scheduled to give his testimony on the US economic outlook before Congress on Wednesday. The speech might give some hints about the Fed's exit strategy.

When the Fed’s 19-member policy committee last met three weeks ago, officials emphasised that they could either increase or decrease the scale of their monthly bond purchases, depending on projections for the economy.

In the weeks since, positive news on the US economy has outweighed the negative, thanks to a stronger jobs market, and growth in retail sales.

So it is no surprise that investors across the globe paid attention when Chicago Fed President Charles Evans, a voting member of the Federal Open Market Committee, the policy-setting arm of the Fed, last week expressed optimism over the US economy, raising concerns that he would support tapering the quantitative easing policy earlier than expected.

The US central bank's massive asset purchases are considered the main driver of US economic growth, so with the latest news that the stimulus programme might be halted or at best, that bond buying will decrease, investors are becoming wary. As the US dollar retreated against major currencies Monday, there’s no doubt that today’s testimony will have a serious impact on the American economy as well as global finances.

Consequently, today will be an anxious waiting game.

Fed Chairman Ben Bernanke. Photograph: Getty Images

Sandra Kilhof Nielsen is a freelance writer and former reporter for Retail Banker International, Cards International & Electronic Payments International.

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Jeremy Corbyn's Labour conference speech shows how he's grown

The leader's confident address will have impressed even his fiercest foes. 

It is not just Jeremy Corbyn’s mandate that has been improved by his re-election. The Labour leader’s conference speech was, by some distance, the best he has delivered. He spoke with far greater confidence, clarity and energy than previously. From its self-deprecating opening onwards ("Virgin Trains assure me there are 800 empty seats") we saw a leader improved in almost every respect. 

Even Corbyn’s firecest foes will have found less to take issue with than they may have anticipated. He avoided picking a fight on Trident (unlike last year), delivered his most forceful condemnation of anti-Semitism (“an evil”) and, with the exception of the Iraq war, avoided attacks on New Labour’s record. The video which preceded his arrival, and highlighted achievements from the Blair-Brown years, was another olive branch. But deselection, which Corbyn again refused to denounce, will remain a running sore (MPs alleged that Hillsborough campaigner Sheila Coleman, who introduced Corbyn, is seeking to deselect Louise Ellman and backed the rival TUSC last May).

Corbyn is frequently charged with lacking policies. But his lengthy address contained several new ones: the removal of the cap on council borrowing (allowing an extra 60,000 houses to be built), a ban on arms sales to abusive regimes and an arts pupil premium in every primary school.

On policy, Corbyn frequently resembles Ed Miliband in his more radical moments, unrestrained by Ed Balls and other shadow cabinet members. He promised £500bn of infrastructure investment (spread over a decade with £150bn from the private sector), “a real living wage”, the renationalisation of the railways, rent controls and a ban on zero-hours contracts.

Labour’s greatest divisions are not over policy but rules, strategy and culture. Corbyn’s opponents will charge him with doing far too little to appeal to the unconverted - Conservative voters most of all. But he spoke with greater conviction than before of preparing for a general election (acknowledging that Labour faced an arithmetical “mountain”) and successfully delivered the attack lines he has often shunned.

“Even Theresa May gets it, that people want change,” he said. “That’s why she stood on the steps of Downing Street and talked about the inequalities and burning injustices in today’s Britain. She promised a country: ‘that works not for a privileged few but for every one of us’. But even if she manages to talk the talk, she can’t walk the walk. This isn’t a new government, it’s David Cameron’s government repackaged with progressive slogans but with a new harsh right-wing edge, taking the country backwards and dithering before the historic challenges of Brexit.”

After a second landslide victory, Corbyn is, for now, unassailable. Many MPs, having voted no confidence in him, will never serve on the frontbench. But an increasing number, recognising Corbyn’s immovability, speak once again of seeking to “make it work”. For all the ructions of this summer, Corbyn’s speech will have helped to persuade them that they can.

George Eaton is political editor of the New Statesman.