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The U.S. Federal Reserve Building is pictured in Washington, March 18, 2008.

Credit: Reuters/Jason Reed/Files

NEW YORK | Thu Jan 26, 2012 6:19am IST

NEW YORK (Reuters) – Federal Reserve Chairman Ben Bernanke lent support on Wednesday to expectations at most leading Wall Street firms that the U.S. central bank will provide new stimulus for the economy in the first half of this year, a Reuters poll showed.

Economists at 12 of 18 primary dealers, the large financial institutions that do business directly with the Fed, said the central bank would do further quantitative easing. the poll was conducted after Bernanke’s news conference.

Bernanke told a news conference after the Fed’s two-day policy meeting that additional purchases of securities is an option if the recovery falters or inflation does not move toward the new target of 2 percent the central bank set.

Eight of the dealers forecast the Fed would undertake a new stimulus program in the first half of 2012, while the remainder of those looking for more stimulus said it would happen later in 2012.

“It is an old call, but we feel much better about it after today’s Federal Open Market Committee meeting,” said Aneta Markowska, economist at Societe Generale in new York. Societe Generale forecasts the Fed will announce a $600 billion program in March.

The Fed has already done two rounds of asset purchases — known as quantitative easing or QE1 and QE2 — under which it has bought $2.3 trillion of mortgage-backed securities and Treasury debt. Lingering economic weakness has fueled expectations of more such stimulus.

The median forecast from 10 dealers pointed to a program of $600 billion of purchases of Treasuries or mortgage-backed securities.

The Fed’s current $400 billion stimulus program, dubbed “Operation Twist,” extends the maturity of the central bank’s Treasury debt holdings in an effort to bring down longer-term rates like those on mortgages. Operation Twist is scheduled to last through June.

In its post-meeting statement on Wednesday, the Fed said it did not expect to raise rates from the current ultra-low level near zero until at least late 2014 in an effort to support a sluggish economic recovery.

Bernanke indicated that the securities purchases so far had had the desired effects.

“In Bernanke’s press conference he seemed to take whatever opportunity he could to emphasize that if the progress toward lower unemployment is too slow and if inflation remains benign, the Fed will be looking for more opportunities to be accommodative or to extend its balance sheet,” said Dana Saporta, economist with Credit Suisse in new York.

Credit Suisse expects the Fed to announce a securities purchase program of about $600 billion in the first half of 2012.

Most economists at primary dealers had already been calling for further Fed stimulus, with 12 of 17 dealers saying the central bank will undertake further quantitative easing in a poll conducted late last week.

The median of forecasts for the size of the program was also $600 billion in the earlier poll, and eight dealers also forecast such a program would be announced in the first half of this year.

There are 21 primary dealers, of which 18 answered the poll on Wednesday.

announce a How large

further round will the

of quantitative program be?

COMPANY easing? when?

BAML yes (Yes) Sept 2012 (Sept 2012) 800 (800)

BMO Capital Possibly (Yes) NA (Q2 2012) NA (400)

Bank of NS yes (Yes) Mid 2012 (Mid 2012) 500 (500)

Barclays No (No) No (No) No (No)

BNP yes (Yes) April (April 2012) 400 (400)

Cantor yes (Yes) April (June 2012) 750 (750)

Citigroup No (No) No (No) No (No)

CSuisse yes (Yes) H1 2012 (2012) 600 (600)

Daiwa No (No) No (No) No (No)

Deutsche No (No) No (No) No (No)

Goldman yes (Yes) Mid 2012 (H1 2012) NA (NA)

HSBC yes (Yes) June (June) NA (NA)

Jefferies yes (Yes) Q2 (Q2 2012) 750 (750)

JP Morgan No (No) No (No) No (No)

Mizuho yes (Yes) Q2 (March) NA (800)

M Stanley NA (NA) NA (NA) NA (NA)

Nomura yes (Yes) Q2 (Q2) 475 (475)

RBC Possibly NA (NA) 500 (500)

RBS yes (NA) Mid 2012 (NA) 600 (NA)

Soc Gen yes (Yes) March (March) 600 (600)

UBS NA (NA) NA (NA) NA (NA)

(Additional reporting by Pam Niimi; Editing by Andrew Hay)

<a href="http://in.reuters.com/article/2012/01/26/usa-fed-poll-idINDEE80P00L20120126?type=economicNewstag:news.google.com,2005:cluster=http://in.reuters.com/article/2012/01/26/usa-fed-poll-idINDEE80P00L20120126?type=economicNewsThu, 26 Jan 2012 00:53:37 GMT”>POLL: Bernanke keeps Wall St stimulus expectations intact

Cotton…silver…palladium…nickel…corn.

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What do these things have in common?

Answer: they are not a dollar bill. and neither are they a euro (EUR) or a renminbi (CNY) or a rupee (INR)…or any of the other currencies that central bankers around the world are aggressively debasing.

“It’s not just our own Federal Reserve that wants to destroy its currency,” observes Chris Mayer, editor of Capital & Crisis. “It seems everybody is doing it. as Eric Sprott, a great investor hailing from the great White North, recently noted in his Markets at a Glance letter:

‘By our count, no less than 23 separate countries have now intervened in the foreign exchange market in some way since Sept. 21, 2010. the goal for all is to increase the supply of their respective paper currencies in order to drive them down in value.’

“Investors, though, aren’t dummies – at least not always. That’s why real assets are rallying.”

The nearby chart tells the tale. Commodities, as an asset class, have become quasi-currencies. From gold to coffee to cattle, commodities of all types have been soaring in price, ever since the Federal Reserve publicly declared its war on deflation. General Bernanke vowed to conduct this war aggressively and to utilize a battlefield tactic he called “quantitative easing.”

The war has been underway for several months, but victory is nowhere in sight. instead the battlefield is littered with the remains of dollar bills that once seemed so powerful and full of potential.

Seeing the results of this campaign, investors are growing increasingly fearful of taking sides with the US dollar. instead, they are placing their security in the hands of gold, silver, platinum and numerous other commodities. as such, every major commodity has outperformed the S&P 500’s 8.8% gain for the year to date. only zinc and cocoa trail behind.

In a world where every major paper currency is suspect, gold is a compelling alternative. but it is not the only alternative. as reliable stores of value, a bale of cotton or a bushel of wheat also seemed preferable to paper currencies.

“And, as if [commodities] needed another reason to rally,” co-editor, Joel Bowman, observed earlier this week, “China is betting on ‘stuff’ over ‘paper.’

“Reports Barron’s: ‘This year, for the first time ever, China has been investing more overseas in assets like iron, oil and copper than it puts into US government bonds.

“‘China in this year’s first half spent $31 billion on hard assets,’ the journal continues, ‘compared with $23 billion on Treasuries and other US government bonds. Experts say China’s investments in each of these asset classes will total about $55 billion for the full year. but even a tie marks a major turnaround from China’s previous practices. for many years, the mainland spent next to nothing on hard assets abroad, while its purchases of US government debt ranged as high as $100 billion a year.’”

Monetary tastes and habits – like culinary tastes and habits – do not change overnight. but once these habits begin to change, they rarely regress to their previous condition. General Bernanke would be unwise to ignore this tendency of human behavior.

Silver prices stay exciting after Tuesday’s outside day reversal

‘Everyone should be raising interest rates, they are too low worldwide,’ Rogers said in a phone interview with Bloomberg News. — PHOTO: BLOOMBERG NEWS

SINGAPORE – CHINA and other global economies should increase interest rates to contain a surge in inflation, said investor Jim Rogers, chairman of Rogers Holdings.

‘Everyone should be raising interest rates, they are too low worldwide,’ Rogers said in a phone interview with Bloomberg News.

‘If the world economy gets better, that’s good for commodities demand. if the world economy does not get better, stocks are going to lose a lot as governments will print more money.’

China’s central bank hasn’t increased rates since November 2007. In the US, the Federal Reserve this month left the overnight interbank lending rate target in a range of zero to 0.25 per cent, where it’s been since December 2008, while the European Central Bank has kept its key interest rate at a record low of 1 per cent.

Policy makers in Malaysia, South Korea, Taiwan and Thailand have increased the cost of borrowing at least once this year, while India has boosted rates four times in five months.

The global economy is at the risk of prolonging a recession after reports over the past two days showed US home sales plunged by a record and Japan’s export growth slowed for a fifth month in July, he said.

The Straits Times

Jim Rogers, chairman of Rogers Holdings, talks with Bloomberg’s Carol Massar from Frankfurt about the impact of Federal Reserve monetary policy on the economy and financial markets, the correlation of the U.S. to global investment markets, and his recommendation of China’s currency. Bloomberg’s Erik Schatzker also speaks.(Source: Bloomberg)

February 1, 2008 09:14 EST

00:00 Outlook for oil prices, investment strategy01:02 Ben Bernanke “doesn’t know what he’s doing.”02:39 Fed policy created “chaos”; contrast to Japan04:10 Impact of U.S. economy on global markets04:56 Strategy: agriculture, currencies; financials05:21 China “buying reserves” in commodities06:34 Aluminum Corp., Alcoa stake in Rio Tinto08:07 Microsoft’s bid for Yahoo; “shorting the ETF”10:06 Recommends renminbi, “safest” for long-term

Running time 10:38

Jim Rogers, FED cuts will hurt Dollar, Yuan Up – Feb. 2008