Fed still pursuing asset purchases by Zuzana Zelenakova

According to Federal Reserve Chairman Ben Bernanke the Fed´s asset purchases helped to lower borrowing costs and thus contributed to the improvement of current financial conditions. As he said the program "increased the willingness of investors to take a reasonable amount of risk and create some support for the economy," he said. "I think it was an effective program." However, not all the experts are convinced as fara s the effectiveness of further purchases is concerned. There is a risk of diminishing returns from the Fed´s next Money printing. The Fed pursues this recent policy as the recovery in the US is not going that well as the unemployment rate reached al! most 10 percent and inflation slumped even below the central bank´s predictions. Low inflation in turn raises concerns about possible deflation. "One should not expect too much from further quantitative or credit easing," said Olivier Blanchard, the chief economist of the International Monetary Fund. "It should be done but the implications for the economy will be limited." "There's a lot of questions about quantitative easing and how it works and how communications policies work, but they need to be tried because this is still a crisis," said former White House economic adviser Christina Romer. As far as the unemployment rate is concerned President Obama stressed that USA experienced eight months of job growth in a row, however, the problem is that the crisis left „much bigger hole to fill“. That means further acceleration of job growth. As it comes to money printing, it will affect not only markets at home but also abroad. The weak dollar will mean tighte! r monetary and fiscal policy for emerging economies. "A lower ! dollar a nd a lower euro is fine for all of you, but it's not fine for us. You are making us uncompetitive and we are the people sitting on the 25 percent unemployment and we need to work our way out of it," said South African Finance Minister Pravin Gordhan.

related story (sgx18380): http://news.yahoo.com/s/nm/20101010/bs_nm/us_economy_weekahe...

by Zuzana Zelenakova for Cantell TV (http://cantell.tv)

Cantell TV is the fastest growing provider of digital broadcasting coupled with telecommunications, allowing people to easily control,! view, upload and share digital content through proprietary interface coupled with free phone calls. Cantell TV is committed to delivering infinite choices to your world of entertainment at the tip of your fingers.