Federal Reserve Chairman Ben Bernanke reminded everyone on Wednesday that the Fed is by “no means on a preset course” as far as tapering of asset purchases is concerned. From Bloomberg:
“We’re going to be responding to the data,” Bernanke said today to the House Financial Services Committee. “If the data are stronger than we expect, we’ll move more quickly” to reduce purchases. If data “don’t meet the kinds of expectations we have about where the economy’s going, then we would delay that process or potentially increase purchases for a time.”
Indeed, US economic data on Wednesday suggest that tapering in the near future is by no means assured.
Housing starts fell 9.9 percent in June, driven by a 26.2 percent plunge in multi-family homes. Building permits fell 7.5 percent.
However, some economists attributed the decline in housing starts last month to the weather. “It looks like it's weather-related,” said Sam Bullard, a senior economist at Wells Fargo Securities. “On the surface it doesn't look good, but we are confident that starts activity is still going to climb higher in the months to come.”
Also, the Fed's Beige Book published on Wednesday indicated that the economy continued to grow at a modest to moderate pace in June and early July, with residential real estate and construction activity increasing at a moderate to strong pace in all districts.
Meanwhile, expectations for additional monetary stimulus from the Bank of England receded after minutes of the central bank's meeting earlier this month showed on Wednesday that all policy makers voted against more bond-buying.
In addition, a report on Wednesday showed that the number of Britons claiming jobless benefit fell by 21,200 in June, the eighth consecutive decrease and the fastest rate of decline in three years.
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