Fed hints at more QE in near future

Marion Dakers
AMERICA’S Federal Reserve is considering a new round of quantitative easing (QE) “before long”, according to the minutes of the panel’s most recent meeting, released yesterday.

The minutes said “many” Fed officials thought a second round of monetary easing might be needed to kickstart America’s flagging recovery, in the strongest signal yet that they are beginning to near an agreement.

Analysts said the Fed could start buying up government bonds by the time of the panel’s next meeting in November if the economy needs extra support.

The minutes of the Fed’s meeting on 21 September said “many” panel members thought “it would be appropriate to provide additional monetary policy accommodation”.

The panel of banking governors lowered its growth forecasts for the third meeting in a row, on the back of rising unemployment and a struggling housing market. It said that while it was “unlikely that the economy would re-enter a recession”, some of the panel was concerned that signs of economic growth “could be slow for some time”, leaving “the economy exposed to potential negative shocks”.

“We believe the FOMC will undertake further monetary policy accommodation during its November meeting,” said IHS Global Insight economist Gregory Daco. “The question is no longer if and when but how and how much?”