The Federal Reserve is likely to provide further quantitative easing at its Sept. 20-21 meeting, says Jan Hatzius, chief U.S. economist for Goldman Sachs.
But he doesn’t expect the action to do much for the economy.
“Our expectation at that meeting is that we will get additional easing most likely through something that has been called the twist,” Hatzius tells CNBC. Twist refers to the Federal Reserve buying long-term Treasury securities at the same time that it sells short-term Treasuries.
With credit demand so moribund, the move will likely have less effect than usual, he says.
“I do think there would be some positive impact, but we're talking probably a few tenths of a percentage point on GDP growth -- nothing really dramatic.”
While some economic indicators, such as consumer confidence, have been weak in recent weeks, there is enough strength to drive GDP growth above 1 percent this quarter, Hatzius says. Still, he sees a one in three chance of a double-dip recession.
Many other experts are more bearish on the economy than Hatzius. “The chances that we are in something that is going to feel like a recession, are close to 100 percent,” Joshua Shapiro, an economist at MFR, tells The New York Times.
“Whether we reach the technical definition: I think is probably close to 50-50.” A National Bureau of Economic Research committee officially determines when there’s a recession.
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