Wednesday, March 9, 2011

Global Market Weekly Review, 09-03-2011

Federal Reserve Chairman Ben Bernanke signaled he is in no rush to tighten credit after the Fed finishes an expansion of record monetary stimulus, seeing little inflation risk and still-slow job growth. A surge in the prices of oil and other commodities probably won’t generate a lasting rise in inflation, Bernanke told lawmakers in semi-annual testimony on monetary policy. A “sustained period of stronger job creation” is needed to ensure a solid recovery, and the Fed’s benchmark rate will stay low for an “extended period,” he added.

Bernanke said an improvement in state and local government finances will depend on the rate of U.S. economic expansion. “If the economy continues to strengthen at about the pace projected by the Federal Reserve and many private forecasters, states and localities may start to get a little breathing space,” he said. He added that measures of risk in the market for state and local debt that rose earlier this year are now receding.

The European Commission raised its eurozone growth forecast to 1.6% for 2011, but warned that markets remain fragile and unrest inthe Arab world threatens to drive up inflation. The commission also hiked its 2011 inflation forecast for the eurozone from 1.8% to 2.2%, above the European Central Bank's 2.0% threshold for price stability.

Source: ING Funds Berhad

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