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August 31, 2012

Quantitative Easing? As Fed action goes…

by Rylan Stewart
The Federal Reserve (1)

This quote from Fed Chairman Ben Bernanke should sum everything up nicely. From Jeff Cox on CNBC, reporting on Bernanke’s August 31 remarks from Jackson Hole, Wyoming:

“The hurdle for using nontraditional policies should be higher than for traditional policies,” he said. “At the same time, the costs of nontraditional policies, when considered carefully, appear manageable, implying that we should not rule out the further use of such policies if economic conditions warrant.”

In other words, same old, same old: the Fed stands ready to act, but for now, won’t. The economy isn’t going so well, but not bad enough that the Fed will act “nontraditionally.” The Federal Open Market Committee (FOMC) recently discussed another round of QE3 if the economy didn’t pick up, and while Bernanke reiterated the Fed’s willingness to act, the “hurdle” is set higher and we will have to settle for weeks of speculation leading up to the FOMC meetings on September 12 and 13.

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