Bye, bye, QE
Short of a new financial crisis and a major economic downturn, it's unlikely that the Fed would return to the quantitative easing (QE) tool any time soon.
LAST Wednesday's announcement in Washington didn't come as a big surprise, and some would argue that it was anti-climatic. The US Federal Reserve was ending its quantitative easing (QE) stimulus programme - reducing its last US$15 billion-a-month of asset purchases to zero - which it had launched in November 2008 at the peak of the financial crisis and amid fears that the American economy and the rest of the world could face a rerun of the Great Depression.
The Fed said in a statement issued after its Federal Open Market Committee (FOMC) meetings last Tuesday and Wednesday that despite the current global economic downturn, it was confident that the American economic recovery would continue, and that the central bank's targets for inflation and unemployment were moving in the right trajectory. Responding to the improvement in the economy, the Fed has already started gradually cutting back - or "tapering" - QE since last year.
"The Committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability," the Fed said.
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