Tags: fed | qe3 | easing | cnbc

CNBC Poll: Fed Expected to Launch More Easing Soon

Friday, 12 Aug 2011 12:14 PM

The Federal Reserve is increasingly likely to roll out a third round of quantitative easing: asset purchases made with the aim of propping up the economy, according to a CNBC survey.

So far, Federal Reserve Chairman Ben Bernanke has carried out two rounds of quantitative easing, the second of which, known widely as QE2, being a $600 billion bond buyback that pumped up the stock market and wrapped up June 30.

Critics says easing weakens the dollar and pumps up inflation figures, although more and more experts say monetary policy authorities are prepping a third round due to continued economic sluggishness.

bernanke200.jpg
Fed Chairman Ben Bernanke
(Getty Images photo)
About 46 percent of an August CNBC survey’s respondents say QE3 is coming, up from 19 percent in July.

"There is no doubt that over the last week, the odds of seeing another round of asset purchases has risen significantly," says Tom Porcelli, chief U.S. economist at RBC Capital Markets, CNBC reports.

"This doesn’t mean we think it will have any more success than QE2. What this simply reflects is a Fed with few remaining options.”

The poll also finds that most feel Standard & Poor’s shouldn't have downgraded U.S. debt ratings and that the Federal Reserve will be unable to live up to its recent stated commitment to keep interest rates low for the next two years.

Some say the Fed can keep rates low and accommodate expansionary policies, but the days of outright asset purchases are probably gone.

“They will open the door to some type of symbolic easing action,” says David Jones, president of DMJ Advisors and a former Fed economist, according to Fox Business.

“They’re not going to give us QE3.”

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The Federal Reserve is increasingly likely to roll out a third round of quantitative easing: asset purchases made with the aim of propping up the economy, according to a CNBC survey. So far, Federal Reserve Chairman Ben Bernanke has carried out two rounds of quantitative...
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