In his second day of Congressional testimony Ben Bernanke appeared to backtrack on comments from yesterday where he said QE3 could be a near-term option. The Fed Chief said they are not planning any further stimulus at this time (via MarketWatch):
Now is not the time to launch a new round of stimulus, said Federal Reserve Chairman Ben Bernanke on Thursday. “We are not prepared at this point to take further action,” Bernanke told the Senate Banking Committee, in the second of two days of testimony to Congress on monetary policy. Bernanke said the central bank wants to see whether conditions improve in such a way would make its forecast of 3.5% growth over the next 18 months a realistic possibility. At the moment, the economy seems stuck in a 2% growth range. “We would like see if, in fact, the economy does pick up as we are projecting,” Bernanke said. The Fed chairman has said the Fed is examining several untested means to stimulate growth if conditions deteriorate, including more asset purchases. Bernanke admitted that more asset purchases may not be effective. “We are not proposing anything today,” he said. “The main message I want to leave is that this is a serious situation. It involves significant loss of human and economic potential. We want to make sure we have the options when they become necessary.”
It looks like the equity markets are going to have to fall much more than a few percentage points to get another “wealth effect” going. After all, the last one worked so well….