Goldman´s Jan Hatzius: FED to end QEII but very, very slow to exit from ZIRP...

Discussion in 'Wall St. News' started by ASusilovic, May 12, 2011.


    HATZIUS: And I don't think that much is going to happen in June. They're going to end QE2. They've said that.

    But beyond that, I think they're still going to tread very, very cautiously in terms of moving towards the exits (ph). It's going to take a very long time in our view.

    BOLTON: We know that you have changed actually your growth forecast for the U.S. economy, right? You pared (ph) them a little bit a few months ago. Where do you see things now?

    How do you see growth if we just had to target the end of this year?

    HATZIUS: So the first quarter came in clearly weaker than we thought and this is as far as the VEP (ph) numbers were concerned. I don't think the GDP numbers were necessarily a great gauge of what was going on.

    If you also look at the service and the labor market data in the first quarter, those were quite a bit firmer. Going forward, I think the second quarter is going to be stronger than the first.

    Our current forecast is four percent, that the rest of that is probably a little on the downside.

    And I think the rest of the year is going to be moderate growth, somewhat above trend, but not a runaway recovery, but you know, a gradual improvement with some modest decline in the unemployment rate.

    But I think we're still going to have high unemployment, low inflation and easy monetary policy.