Bernanke and Draghi: compare and contrast

Both left asset markets a little deflated, with no clear plans for additional stimulus mapped out on either side of the Atlantic after the ECB’s policy meeting on Wednesday or after Bernanke’s testimony before US Congress on Thursday. Draghi did little, opening the door to rate cuts while pushing the burden for additional measures back to government level. Bernanke also did little, leaving the door open to QE3, but also pushing the burden back to the government.

For those betting on whether there will be a replay of December 2011 and January 2012 and that the two central banks will eventually respond to growing worries about global growth with additional measures, the good people at Scotiabank have had a bit of fun and created word clouds of the two leaders’ speeches.

For currency markets, the possibility of action is clearly important: more measures should lift asset markets and weaken the dollar, while if there are no new measures worries are likely to escalate and drive haven demand for the US currency.

For now, it would seem the ECB has the most to ponder. As Camilla Sutton, FX strategy chief at Scotia, puts it: “To us it spells a story of a Fed that is particularly concerned with the fiscal and economic outlook; while the ECB seems to be thinking about a lot of questions.”