Chronicle of QE3 exit foretold ■Volatility is back ■Long-term yields up ■Stock exchanges down:: BNP Paribas

Renewed volatility in the financial
markets helped focus the attention of
the G8 heads of state, who were
meeting at the beginning of the week
in Northern Ireland, on the main
challenges that must be met to
promote long-term world growth. Ben
Bernanke was absent but he was in
everyone’s head. Over the past
weeks, investors react nervously his
statements. The Fed’s president
suggested that the central bank could
begin to slow the pace of its QE3
monetary easing programme in the
near future. In this context, the press
conference which followed the FOMC
meeting on 18 and 19th of June was
an occasion for him to clarify his
point. Ben Bernanke has never been
so explicit about the pace of changing
monetary policy in the near future.
This changing will be closely hinged
on macroeconomic data trends. A
QE3 exit is likely as soon as the
middle of next year, once the
unemployment rate has dropped to
about 7%.In the meantime, the
evolution in monetary and financial
conditions is also key. Along with the
analysis of economic data, the latest
will determine whether maintaining
the current massive monetary
stimulus is still accurate or not.

�� -->