The US Fed Is Heading Towards Not So Successful Japan’s Style Of Quantitative Easing?
The US Federal Reserve’s decision on 10 August to keep its holdings of US Treasury and mortgage-related securities stable at US$2.054 trn, by rolling over Treasuries and reinvesting proceeds from mortgage-related securities as they mature, has prompted some economists to question whether it is heading towards the Japanese style of quantitative easing last decade which yielded little impact. The Fed’s latest move is aimed at stopping the shrinkage of its balance sheet from prompting an increase in long-term borrowing costs, potentially allowing rates to fall further. While the move shows a change in policy direction away from exiting monetary stimulus, the Fed didn’t indicate it was ready to pursue larger-scale purchases of securities.
Tracking The World Economy... - 13/08/2010
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