In 1887 Alexander Tyler, a Scottish history professor at the University of Edinburgh, had this
Further Quantitative Easing is a Bad Idea
Further quantitative easing is a bad idea, according to an article in Forbes Magazine:
Markets have positioned themselves for some sort of Fed easing, particularly in the form of an extension of Operation Twist. While the U.S. economy has definitely slowed down, which hit along with the flaring up Europe’s sovereign debt crisis, the threshold for further QE hasn’t been reached, according to Nomura. The effect of a “twist of less resistance” would offer limited benefits as the extension would last three to four months at most, they argued. Fed Chairman Ben Bernanke would be better offer disappointing markets on Wednesday, keeping his powder dry to build a bigger case, in case he needs it, later this year.
The Federal Reserve announced that it would keep its key interest rate on hold at 0.25 percent, as expected, but the big news was whether or not the Fed would choose to ease further. Indeed they have; but is it what the market wanted?
The FOMC policy decision today shook markets as the central bank announced it plans to extend the duration of Operation Twist until the end of the year, after lowering growth, employment, and inflation forecasts for 2012 through 2014. Markets sold off immediately on the release with the dollar surging against all its major counterparts. The advance was short-lived however as markets digested remarks from Fed Chairman Bernanke’s press conference where he reaffirmed the central bank’s commitment to support the recovery.
May one be so bold to ask: WHAT recovery ?
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