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THE BOTTOM LINE

The Fed’s quantitative easing programme has cost too much

The total bill could exceed US$500 billion. A proper evaluation should make the next one less expensive

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    • If the US Federal Reserve had begun to tighten monetary policy sooner, the peak in short-term rates would likely have been considerably lower, resulting in fewer losses.
    • If the US Federal Reserve had begun to tighten monetary policy sooner, the peak in short-term rates would likely have been considerably lower, resulting in fewer losses. PHOTO: REUTERS

    Bill Dudley

    Published Tue, Apr 30, 2024 · 05:45 PM

    AMERICA’S experiment with quantitative easing – and the ensuing quantitative tightening – is almost over.

    This week, the US Federal Reserve will likely announce plans to slow the shrinkage of its balance sheet. This foreshadows the end of a long period in which it sought to stimulate the economy by holding large quantities of Treasury and mortgage securities, and later had to shrink its balance sheet.

    So did it work? Yes, but at excessive cost.

    The Bottom LineUS Federal ReserveQuantitative easing

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