UPDATE 1-PREVIEW-Global outlook casts shadow over Fed retreat

(Updates with U.S. data, BOJ governor detail)

By Mark Felsenthal

WASHINGTON, Aug 25 (BestGrowthStock) – Central bankers from around
the world will assess a darkening economic outlook at their
annual U.S. mountain retreat this week with discussion of
printing yet more money to spur growth on the agenda.

Federal Reserve Chairman Ben Bernanke is likely to signal
his views about the uncertain prospects for the world’s biggest
economy but probably won’t offer many clues on whether the U.S.
central bank will pump more cash to keep the recovery going.

Fears the U.S. economy was at risk of a new downturn were
heightened on Wednesday by new economic data that showed in
July single-family home sales slumped to the their slowest pace
on record and factory orders fell by the most in 1-1/2 years.

Other top central bankers will arrive at the Jackson Hole,
Wyoming, resort with their own concerns.

European Central Bank President Jean-Claude Trichet faces
his own challenge of a two-tier recovery.

While the euro zone economy as a whole has strengthened
thanks to strong German growth, the ECB looks set to keep
providing banks with unlimited funds at a fixed rate to help
banks and governments in Europe’s troubled periphery.

Bank of England and Bank of Japan officials will come to
the Teton mountains likely to talk about how they might have to
push more money into their economies to stimulate growth, a
last resort when benchmark interest rates approach zero.

Bank of Japan Governor Masaaki Shirakawa was due to leave
Tokyo on Thursday for the Jackson Hole meeting, making it less
likely the Bank of Japan would hold an emergency meeting in the
next few days to ease monetary policy. [ID:nTKV006403]

“It’s not just the U.S. that stalled in June and July, it’s
the world economy that hit a wall over the summer months,” said
Ellen Zentner, a U.S. economist for Bank of Tokyo-Mitsubishi
UFJ in New York.

The likely mood of concern among the central bankers
heading for the wilds of Wyoming contrasts with the optimism of
a year ago, when debate at Jackson Hole focussed on ways to
wean economies off emergency support as they emerged from

The discussions give the world’s top central bankers a
chance to thrash out the major challenges of the moment as well
as hike on trails in the scenic national park.

Past roundups have come at economic turning points: the
start of the credit crisis in 2007, the days before Lehman
Brothers collapsed in 2008 and before the start of the recovery
in 2009.

Chicago Federal Reserve Bank President Charles Evans said
on Tuesday that the risks of a double-dip U.S. recession have
risen in the last six months. While he added he did not think
that was the most likely scenario, he said high unemployment
and a fractured housing sector would make the recovery a
fragile one. [ID:nN24238910]


Bernanke’s speech on Friday will be a keystone of the
three-day conference, which has chosen as its theme the
challenges of the next decade. His audience will be listening
keenly for clues about shorter-term support for the economy.

The Fed said on Aug. 10 it would buy Treasury bonds with
proceeds of maturing securities in its massive portfolio. It
had been letting its balance sheet shrink naturally,
effectively removing some of its huge stimulus.

“This wasn’t the right time to send a signal that we would
be allowing a tightening to take place as these securities
rolled off our balance sheet,” Dallas Fed President Richard
Fisher told Fox Business Network on Tuesday.

The big question now is whether the Fed will start buying
Treasury bonds more aggressively again to provide the U.S.
economy with a new injection of cash.

The Wall Street Journal said on Tuesday that more senior
Fed officials than previously thought voiced concerns about or
objections to the relatively modest move to use mortgage debt
maturities to buy Treasuries at the Aug. 10 meeting.

The reported split within the central bank’s upper echelons
suggested the Fed could stand pat after rebalancing its balance
sheet and set a high bar for any further asset purchases.

“Under these circumstances, it would be premature for
Chairman Bernanke to provide a set of guideposts for future
policy moves, as helpful as that would be for the markets and
as much as we believe that additional easing will ultimately be
needed,” analysts at Goldman Sachs said in a note on Tuesday.

“Instead, we expect him to concentrate on how the economy
and the Fed have come to where they are now, with at best just
a general sense of economic risks in the months ahead.”
(Reporting by Mark Felsenthal; Editing by Kim Coghill and Eric

UPDATE 1-PREVIEW-Global outlook casts shadow over Fed retreat