Tags: Fed | need | Stimulus | bernanke

CNBC Survey: Fed Won't Hint at a Need for More Stimulus

Tuesday, 24 April 2012 11:09 AM

Federal Reserve officials are meeting to discuss interest rates and monetary policy and will likely agree the economy doesn't need new stimulus measures though they will stress interest rates will stay low through 2014, a CNBC survey shows.

About a third of the 53 economists, fund managers, and strategists who responded to the CNBC survey see the Fed rolling out quantitative easing in the next 12 months, unchanged from the March survey.

Under quantitative easing, the Fed buys bonds from banks with the aim of flooding the economy with liquidity to encourage price stability and hiring.

Editor's Note: Did Bernanke Rig Your Retirement? Shocking Video . . .

The Fed has conducted two rounds of easing since the downturn, pumping $2.3 trillion into the economy in the process.

"The window is closing on the Fed's flexibility to do something dramatic before the election," John Kattar of Eastern Investment Advisors writes in response to the survey, CNBC adds.

"I expect them to broadly hint at the possibility of QE at next week's meeting, just to keep options open. But it will probably require much worse news."

Federal Reserve officials have suggested recently that while quantitative easing remains an option if the economy heads south, there are no immediate plans to resort to extraordinary monetary tools as of now.

The Federal Reserve has said that economic conditions meriting near-zero interest rates will stick around through 2014, and 49 percent of the survey's respondents expect no change to that policy.

Quantitative easing often becomes a hot-button issue.

Supporters says it's necessary to steer the economy away from crippling deflationary decline and aims to create jobs, while critics charge it's nothing but printing money out of thin air and will fuel inflationary pressures down the road.

Some blame rising food and energy prices on such policies, as excess liquidity finds often its way to commodities markets.

"That's a hideous, hideous policy mix because it hurts the people in our economy with the lowest incomes. They see it at the grocery store, they see it in inflation for basic goods," noted investment banker Christopher Whalen tells Newsmax.TV in an exclusive interview.

"We need to have a much more honest conversation about the tradeoff between inflation and real growth," adds Whalen, co-founder and vice chairman of Lord, Whalen LLC, parent of Institutional Risk Analytics, the Los Angeles-based provider of bank ratings, risk management tools and consulting services for auditors, regulators and financial professionals.

Editor's Note: Did Bernanke Rig Your Retirement? Shocking Video . . .

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Tuesday, 24 April 2012 11:09 AM
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