fed to enter new normal with expected qe stimulus end
Last Updated : GMT 06:49:16
Arab Today, arab today
Arab Today, arab today
Last Updated : GMT 06:49:16
Arab Today, arab today

Fed to enter new normal with expected QE stimulus end

Arab Today, arab today

Arab Today, arab today Fed to enter new normal with expected QE stimulus end

Federal Reserve Chairman Janet Yellen
Washington - AFP

 The US Federal Reserve is likely to make a final push into the post-crisis era this week with a decision to finally wind up its six-year-old economic stimulus operations.
A few worrisome clouds over the global economy might be expected to give Fed Chair Janet Yellen's Federal Open Market Committee pause when they meet on Tuesday and Wednesday.
But after repeatedly signaling the end this month of the bond-buying program known as quantitative easing, the Fed is unlikely to change course, analysts say.
The Fed is currently adding $15 billion in cheap funds to the economy per month under QE, down from $85 billion last December.
Injecting tens of billions of dollars each month into the economy to repress longer term interest rates has had less and less real impact, while generating what some worry are fresh bubbles in stock markets.
And despite deflation worries in Europe and a surge of concern over the global economy generally, QE3 -- the third edition of the operations -- has already been tapered to the point that continuing would be symbolic.
The chance that the FOMC might hold off remains. Last week James Bullard, head of the Fed's St Louis branch and a former FOMC member, said QE should continue until the data is more clear.
US inflation expectations are dropping, Bullard told Bloomberg TV.
"And that is something that a central bank cannot abide... we could go on pause on the taper at this juncture and wait until we see how the data shakes out into December."
But analysts point out that the Fed does not act on one or two months' data, but looks at the trend, which has been steady if modest improvement in the US economy.
"The decline in the inflation expectations will undoubtedly take the center stage of FOMC discussions," said economists at BBVA in a client note.
"At the same time, the focus of the committee's discussion is expected to progress beyond the timing to end QE3."
More important, they said, is what the FOMC says about the next phase of policy: the initial increase in the benchmark fed funds interest rate, which has been held at zero since the end of 2008.
Right now that is not expected until mid-2015. But any change in FOMC guidance language could give a start to rate-sensitive markets.
- Back to normal -
For the Fed the move signals the beginning of policy "normalization" after six years of a crisis stance
In all since 2008, the Fed has pumped into the economy around $3.5 trillion of easy money through QE operations, buying Treasury and mortgage securities to push down long-term interest rates to encourage investment and spending.
That was achieved, but with limited impact in part because while the Fed injected cash into the system, the government has slashed spending for the past three years.
One clear result though has been to reinflate the value of stocks, property and other assets that collapsed during the crisis. Now US stocks have soared to record levels, sparking recent calls for caution, including from the International Monetary Fund, that QE operations have overheated markets.
But at the same time, the IMF and others have warned the Fed to be extremely careful gearing down for the turbulence that could come with rising interest rates around the world.
Despite Bullard's view, said Chris Low of FTN Financial, "we expect the committee will stick to its guns and shut the controversial program down after Wednesday's FOMC meeting."
The end of QE technically will not amount to tightening. The Fed says it will not sell off the assets, and for those maturing it will roll them over in the near term.
The FOMC does not plan to begin reducing its balance sheet until after it raises interest rates.
Last month, Yellen said it could "take to the end of the decade" for the Fed to get rid of the assets it bought under QE.

 

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

fed to enter new normal with expected qe stimulus end fed to enter new normal with expected qe stimulus end

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

fed to enter new normal with expected qe stimulus end fed to enter new normal with expected qe stimulus end

 



GMT 12:48 2016 Sunday ,27 November

Cilic, Dodig push Croatia to brink of Davis Cup

GMT 05:24 2017 Thursday ,28 December

Erdogan says 'terrorist' Assad cannot be part of Syria

GMT 12:59 2016 Saturday ,05 November

WB welcomes economic reforms in Egypt

GMT 18:40 2016 Saturday ,05 November

Egyptian GDRs in London down

GMT 10:57 2017 Wednesday ,06 December

Peru striker Guerrero has doping ban extended

GMT 17:51 2017 Tuesday ,07 March

Trump Signs New Travel Ban on Six Muslim Countries

GMT 10:30 2017 Wednesday ,06 September

Saudi Information Ministry praises media role during Hajj

GMT 15:29 2017 Tuesday ,24 January

Mind games really do help your brain

GMT 06:55 2015 Thursday ,01 October

Boston Red Sox beat Yankees

GMT 08:17 2017 Monday ,28 August

Bahrain celebrates World Humanitarian Day 2017

GMT 02:07 2017 Tuesday ,28 February

Opposition seeks Russian support at Syria talks
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday