Tags: Expectations | Rising | Fed | Easing

Expectations Rising for More Fed Easing, CNBC Survey Finds

Tuesday, 01 Nov 2011 03:12 PM

About half of market participants in a CNBC survey expect the Federal Reserve to roll out a third round of quantitative easing.

The survey finds that 48 percent expect a fresh round of quantitative easing — asset purchases from banks that aim to pump up the economy and hiring — up from 34 percent in a September survey, CNBC reports.

On the flip side, 46 percent of the respondents say there will be no more such easing, down from 59 percent in the last survey.
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Quantitative easing often draws criticism because as the Fed buys assets like Treasurys or mortgage-backed securities held by banks, it injects the financial system full of liquidity in the process, thus weakening the dollar and threatening to push up inflation rates in the process.

bernanke200gettyv3.jpg
Ben Bernanke
(Getty Images photo)
On the positive side, stock prices tend to rise.

Some are keeping an eye out for a reversal of such loose policies.

"The biggest surprise we will get in the next year is that the Fed will be forced to tighten its policy stance," writes Brian Wesbury of First Trust Advisors, who is among those forecasting no easing, CNBC adds.

"The economy is not on the brink of recession and inflation will become a serious and visible problem."

Federal Reserve officials on the all-important Federal Open Market Committee, which decides on such policies, including hikes and cuts to interest rates, remain split on the issue.

Some say more easing may be required, including William Dudley, president of the very influential New York branch of the Federal Reserve.

"I don't think the Fed has run out of bullets," Dudley said recently, according to Reuters

"It's possible that we could do another round of quantitative easing, we could do quantitative easing round three."

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About half of market participants in a CNBC survey expect the Federal Reserve to roll out a third round of quantitative easing. The survey finds that 48 percent expect a fresh round of quantitative easing asset purchases from banks that aim to pump up the economy and...
Expectations,Rising,Fed,Easing
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2011-12-01
Tuesday, 01 Nov 2011 03:12 PM
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