After Rajan’s pep talk, Yellen bats for QE3 to be continued

Stock markets firmed up on Thursday, ending their seven-day losing run, after Janet Yellen, nominee for the US Federal Reserve chairperson, indicated she was for an easy monetary policy till the economy recovered further. Her remarks came after Reserve Bank of India Governor Raghuram Rajan on Wednesday evening announced bond purchases, bringing yields down early on Thursday.

But, equity benchmarks gave up a portion of their early gains, while bond prices dropped, as the higher-than-expected October inflation data led to some profit booking. Financial markets will remain closed on Friday on account of Muharram.

The BSE Sensex rose 205 points, or one per cent, from its previous close to end the day at 20,399.42 — off the day’s high of 20,568.99. The NSE Nifty gained 66.55 points, or 1.11 per cent, to close at 6,056.15, 45.5 points lower than the intra-day high of 6,101.65.

Encouraged by Yellen’s comments — which suggested the Quantitative Easing (QE) 3, the US Fed’s massive bond-buying programme, would stay for a while — other Asian markets also gained. She had said the US unemployment rate in October, at 7.3 per cent, was still high. It reflected a labour market and economy far short of potential, triggering weakness in the dollar against most currencies.

Later, during testimony to the Senate Banking Committee, she said: “I consider it imperative that we do what we can to promote a very strong recovery.”

Source: Business Standard

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