Tags: fed | easing | economy | qe3

JPMorgan: Good Chance of QE3 Starting Sept. 21

Wednesday, 31 Aug 2011 08:49 AM

Minutes from the Federal Reserve Open Market Committee's most recent meeting shows that the monetary authority will likely roll out a third round of quantitative easing by Sept. 21, the day its next meeting concludes, U.S. financial institution JPMorgan analysts write.

The Fed has already launched two rounds of quantitative easing, known widely as QE1 and QE2.

QE1 saw the Fed buy $1.7 trillion in assets from banks, mainly mortgage-backed securities, while QE2 saw the central bank snap up $600 billion of Treasury bonds.

The aim of such measures is designed to pump banks full of money so they'll investment and fuel more sustained economic growth, although the economy remains stuck in the doldrums.

bernanke200getty.jpg
Fed Chairman
Ben Bernanke

(Getty Images photo)
While critics says such policy weakens the dollar and pressures inflation rates upward, some say Fed Chairman Ben Bernanke is ready to roll out some sort of easing in order to avoid recession.

Besides buying bonds, Fed easing could call for an extension of maturities of assets on the Fed's balance sheet.

"We believe the minutes lend themselves to our view that there is a somewhat better-than-even chance the Fed takes action at the next meeting to increase the average maturity of assets on their balance sheet," JP Morgan's Michael Feroli writes in a note, according to ZeroHedge.

Some Fed officials won't rule out further easing, including St. Louis Fed President James Bullard

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"Depending on future economic data QE3 is one choice, but we need to gather information about how the economy will perform in the second half of the year," Bullard tells Japanese newspaper Asahi, as reported by Reuters

"Before any moves, I would like to confirm that inflation is easing."

Bullard currently does not have a vote on monetary policy this year.

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Minutes from the Federal Reserve Open Market Committee's most recent meeting shows that the monetary authority will likely roll out a third round of quantitative easing by Sept. 21, the day its next meeting concludes, U.S. financial institution JPMorgan analysts write. The...
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Wednesday, 31 Aug 2011 08:49 AM
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