Posts filed under “Federal Reserve”
Farewell QE, you have been a magnificent success:
The moral contours of QE depend on your angle of vision. But would you rather be surrounded by mass unemployment?
-Ambrose Evans-Pritchard, the Telegraph, Dec. 18.
Outgoing Federal Reserve Chairman Ben Bernanke managed to thread the needle yesterday, announcing a modest monthly taper in quantitative easing of “only” $10 billion dollars, while leaving the remaining $75 billion in monthly bond purchases untouched. He also suggested the Fed will keep rates accommodative — read very low — for even longer than previously promised.
Rather than crash (as was so widely predicted), the markets took off: The Dow industrials up 1.84 percent (292.71 points), while the S&P 500 gained 1.66 percent.
While we do live in interesting, even fascinating times, these many disparities raise this interesting question: Why do so many people hate QE?
Here are the six best answers to that question I can muster . . .
Category: Federal Reserve
When Might the Federal Funds Rate Lift Off? Computing the Probabilities of Crossing Unemployment and Inflation Thresholds (and Floors) Edward S. Knotek II and Saeed Zaman The Federal Open Market Committee has been providing guidance to help markets anticipate when it will begin raising the federal funds rate target. The most recent…Read More
The US October non farm payroll (NFP) report came in much stronger than expected at +204k jobs, rather than the +120k expected, with August and September revised higher. Furthermore, subsequent weekly unemployment data confirms that the US employment situation is improving. US Q3 GDP was better than expected, at +2.8% on an annualised basis, higher…Read More
Has the Fed Stabilized the Price Level? Marc P. Giannoni and Hannah Herman Liberty Street Economics, November 27, 2013 The Federal Reserve Reform Act of 1977 established the monetary policy objectives of maximum employment, stable prices, and moderate long-term interest rates. The goal of “stable prices” has long been understood to mean a…Read More
Shadow Banking and Systemic Risk Regulation Governor Daniel K. Tarullo November 22, 2013 As illustrated, quite literally, by a chart that New York Fed staff produced a few years ago, the term “shadow banking system” encompasses a wide variety of institutions that engage in credit intermediation and maturity transformation outside the insured depository…Read More