Fed very unlikely to launch QE3: JP Morgan Chase

Discussion in 'Wall St. News' started by ASusilovic, May 31, 2011.

  1. WASHINGTON (MarketWatch) - The Fed is "very, very unlikely" to launch another round of asset purchases because of the potential negative political fallout, Michael Feroli, economist at JP Morgan Chase, said Tuesday. Many members of Congress were incensed over the Fed's second asset purchase program of $600 billion in Treasurys that ends on June 30, with many members concerned the central bank's innovative policy would only lead to inflation. "The potential political fallout is so great that the Fed would be extremely reluctant to purchase more assets," Feroli said in a note to clients. This leaves the Fed with little ammunition to support the economy if growth falters, he said. The Fed would likely try to jawbone the markets by announcing that it was putting off plans to shrink its balance sheet or promising to keep interest rates low for longer, Feroli said. But the impact of these steps would be "quite limited" because the market already thinks the Fed is on hold, he said.

    http://www.marketwatch.com/story/fe...gan-chase-2011-05-31?link=MW_home_latest_news

    Risk off. Park your cash in a nice money market fund. Bye, bye stock market "rally"...
     
  2. We still have QE2 for one more month and then QE2.5 (reinvestments of prceeds). Short term rates are still near 0 so I would say that rally can continue for a while.
     
  3. olias

    olias

    food for thought: how many members of Congress do you think are astute economists?
     
  4. Locutus

    Locutus

    Since when does the Fed listen to politicans?
     
  5. olias

    olias

    If your question is directed at me, let me point out the relevant section of that article for you:

    "Many members of Congress were incensed over the Fed's second asset purchase program of $600 billion in Treasurys that ends on June 30, with many members concerned the central bank's innovative policy would only lead to inflation. "The potential political fallout is so great that the Fed would be extremely reluctant to purchase more assets,"