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Hasn't the Fed been warning they'll halt QE "soon" for many years now? I think the actual policy is to keep interest rates low until it's impossible to do so. A
by genwin 12y ago
Hasn't the Fed been warning they'll halt QE "soon" for many years now? I think the actual policy is to keep interest rates low until it's impossible to do so. At present it seems there's no limit in sight to how many $trillions can be borrowed to keep QE going. Why wouldn't the choice always be to keep kicking the can down the road, when the alternative is to pay the piper?
- emgeee 12y agoAs I understand it, the Feds actually have certain metrics like unemployment that they're trying to achieve. The big announcement from last week was that they're starting to hit their numbers and so they'll shift away from using QE (which is somewhat of an emergency tool) back to their main tool, setting short-term interest rates.
- stonemetal 12y agoNo, not really. They have been saying that they are scaling back with eye toward ending it, but not before the unemployment rate is under control. For example this is from July 2013. Fed Chief Ben Bernanke announced in late May that the central bank intends to start slowing down the pace of its purchase “later this year” if the economy continues to improve. He said the purchases could conclude by mid-2014 if the unemployment rate is close to 7%. http://www.marketwatch.com/story/fed-gives-no-hint-on-qe-tapering-timeline-2013-07-31 http://www.marketwatch.com/story/fed-gives-no-hint-on-qe-tap...
- genwin 12y agoThere's a feedback loop to consider. Conclude the purchases when the unemployment rate is close to 7%, then the unemployment rate hits 9% because the nearly-free money tap is off.