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Don't Bet on 'Bernanke Put': Analyst

Friday, 26 Aug 2011 | 8:19 AM ET

Federal Reserve Chairman Ben Bernanke is unlikely to announce a third round of quantitative easing in his Jackson Hole speechthis afternoon, Tony Fratto, the director of Hamilton Place Strategies, a public policy research firm, told CNBC Friday.

Fed Chairman Ben Bernanke
Joshua Roberts | Bloomberg | Getty Images
Fed Chairman Ben Bernanke

"If investors are betting on a Bernanke put, they are setting themselves up for a disappointment. Bernanke hinted at QE3 last year, but I don’t think we are going to see that kind of activity today," Fratto said.

The Federal Reserveis likely to judge that its announcement on 19 August of near-zero interest rates until 2013 was sufficient to quell market fears for the time being, he added, even though the annual symposium in Jackson Hole, Wyoming had, "turned into meetings of great expectations for pronouncements on monetary policy."

Fratto said Bernanke might instead “talk a little bit about outlook, maybe a little bit more about fiscal policy”, leaving further announcements until the Federal Open Market Committee on 20 September.

Opinion is divided over whether the market is expecting or pricing in QE3 . Kevin Cook, senior stock strategist at Zacks Investment Research, told CNBC he did not think the market was expecting it.Goldman Sachs analysts wrote in a note to clients this weekthat investors would be "very surprised if the speech did not include a discussion of asset purchases."

Cook added: “The current rally we have in equities does not live or die by the emperor’s speech today.”

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