Investors grade Fed chair’s performance

A significant number of U.S. investors think that U.S. Federal Reserve Chair Ben Bernanke performance has been “only fair” since he was appointed last fall.

According to a UBS Investment/Gallup poll conducted last month, 39% of investors questioned rated Bernanke’s performance as fair, while 32% felt he was doing a good job.

However, around 23% ventured no opinion, which, UBS says, suggests the jury is still out on the new Fed chair, adding that few extreme opinions were expressed — only 2% said Bernanke’s performance was excellent, while 4% said he was faring poorly.

UBS notes that Bernanke appears to be more highly regarded among investors with more than $100,000 in assets, with 38% giving him a “good” grade.

Initally, Bernanke’s nomination was rated by nearly half of investors as either good or excellent. So what’s changed? “One likely reason is that economic growth is slowing,” UBS notes. “A full 50% of investors perceive the economy as experiencing a slowdown.”

There’s also concern that the Fed is raising interest rates too fast, which could lead to a recession. About 60% of survey respondents rated that as the greatest threat to the U.S. economy over the next six months. Thirty percent believed the opposite: that not increasing rates fast enough will lead to a surge in inflation.

“Perhaps the contemporary policy environment is one in which no central bank could receive very favourable ratings,” UBS concludes. “By continuing to tighten, Bernanke is implementing a policy course that’s understandably going to be at least somewhat unpopular.”

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com