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The Fed to Slow Down QE?




According to this Bloomberg article, the Federal reserve is preparing to "vary the pace" of monthly monetary easing.

The idea "popped up" at the FOMC meeting held in late January 2013.

The Fed is awaiting a substnatial improvement of the US econonomy (particularily the labor market) in order to end the bond purchases.
The monthly 85 billion dollars-worth bond purchases might be trimmed.
As of February 2013, the monthly buying consists of 40 billion dollars-worth of mortgage debt and 45 billion dollars-worth of US treasuries.

The Fed has also states that they will keep the interest rate close to zero "at least as long" as unemployment remains above the 6.5 % mark and inflation will be no more than 2.5 %.

We will most likely have to wait until March 19-20 for the FOMC meeting to find out about the new measures.

Despite this assumption (of lighter monetary easing), it is still a likely scenario that the Fed will in fact continue or even intensify the QE - the size of the next QE will be determined by the US economy's figures - joblessness particularly.

What is interesting this time that within the Fed, voices are already talking about a possible harmful effect of the quantitative easing programme. Therefore, a lightening instead of immediate stop might be necessary.





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