Tags: Moody | Zandi | Fed | Easing

Moody’s Zandi: Further Fed Easing Unlikely Right Now

Monday, 12 March 2012 01:39 PM

Improving unemployment rates mean the Federal Reserve is less likely to stimulate the economy via measures like quantitative easing — asset purchase from banks designed to pump up stock prices and prime the economy, says Mark Zandi, chief economist at Moody’s Economy.com.

The U.S. economy added a net 227,000 nonfarm payrolls in February, outpacing may expectations.

Some Federal Reserve officials have hinted they favor quantitative easing, which steers the economy away from deflationary contraction by flooding the financial system with liquidity, with a weaker dollar as a side effect.

Editor's Note: You Owe It to Yourself to Know What Obama and Bernanke Are Hiding From Americans

Stronger jobs numbers may prompt the Fed to back off on the idea and let the economy grow on its own.

"A lot of the details in the report were solid. I guess the only exception would be the small increase in wages. Barring that, everything looked really solid and all the leading indicators were positive," Zandi tells CNBC.

"I don’t see how the Fed can move. There’s nothing in the jobs data that suggests they need to ease further at this point."

Stocks have risen in recent years due to previous rounds of quantitative easing that saw the Fed inject $2.3 trillion into the economy since the downturn.

Still, many ordinary investors refuse to jump back into the stock market due to widespread uncertainty gripping economies worldwide, leaving hedge funds and other investors profiting from the rally.

Ordinary investors pulled $19 billion from funds that invest in U.S. stocks in December, according to the Investment Company Institute, the Associated Press reports.

"In the old days, if there was a market rally, people would call and ask to put more money in. They felt they were missing the party," says Deborah DeMatteo, an independent wealth manager at 10-15 Associates in Goshen, N.Y.

"Now, people call and ask, 'When is it going back down?'" DeMatteo says. "There's a sense of doom."

Editor's Note: You Owe It to Yourself to Know What Obama and Bernanke Are Hiding From Americans

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Monday, 12 March 2012 01:39 PM
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