The Federal Reserve chairman-Ben Bernanke

Ben Bernanke is preparing to give a key speech that will be closely watched by markets for any hint of new stimulus.

The Federal Reserve chairman will talk to the annual gathering of central bankers at Jackson Hole, Wyoming.

Last year, his speech paved the way for $600bn (£368bn) of quantitative easing - injecting cash into the financial system to try to boost the economy.

This year, with the US again slowing sharply, markets are speculating that further QE may be round the corner.
Market anticipation
Shares have rallied all week in anticipation that the Fed will act to reinvigorate the US recovery.

Earlier this month, stock markets plummeted as economic data pointed to sluggish or virtually non-existent growth in the US and Europe.

"Recent events have made it blatantly clear that the economy is in a funk," says Paul Dales, senior US economist at Capital Economics.

"The housing market remains at rock bottom and even the manufacturing sector, which had been the shining light of this recovery, has come off the boil."

Gold also hit a new record high on Tuesday, before falling back as stocks rallied.

Investors see gold as a haven in times of economic uncertainty, and QE is expected to depress the value of the dollar versus gold, which also makes the precious metal more attractive.
Limited options
Mr Bernanke is not expected to make any major announcements in his speech.

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But last year, unable to cut short-term interest rates any further, Mr Bernanke used his speech to lay out the Fed's alternative policy options.

Markets - correctly - took this as a signal that a second round of QE was imminent.

This year, Mr Bernanke's policy options to try to try to boost growth are seen as more limited.

Most, including QE, work primarily by lowering longer-term cost of borrowing. ...

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