I'm not-low all the time
- Jan 2, 2006
- Reaction score
- Lauderdale By-The-Sea, FL
- Political Leaning
The Federal Reserve will boost its balance sheet by about half a trillion dollars over a six-month period beginning in November and keep it inflated for up to a year, according to a survey of leading markets participants by CNBC.
About 70 percent of the 67 respondents, which include economists, strategists and fund managers, believe the Fed will begin quantitative easing again.
Of those, 80 percent believe the Fed will start before the end of this year. November is seen as the most likely month for the Fed to restart asset purchases by 38 percent of those who took the survey, but December was a close second with 32 percent.
“The trigger for the resumption of quantitative easing late this year will be an increase in unemployment back into double-digits,” wrote Mark Zandi, of Moody’s Economy.Com. He thinks the Fed will act in December and ultimately purchase an additional $1 trillion in assets.
The talk among experts is that the Fed is targeting interest rates for the sake of inducing inflationary expectations. Such a strategy could flatten an already flat (relatively) yield curve to the point where it resembles that of Japan's (1 year: 0.12, 5 year: 0.3, 30 year 1.87), although i doubt it will go to such an extreme as Japan is facing its own set of unique issues that is responsible for their price stagnation.
Edit: I should have provided the charts.