Are there folks on the FOMC itching to buy a half-trillion in MBS? Yes. Janet Yellen chief among them.
Are their 3-4-5 members of the committee ardently opposed to such a move? Yes.
So the tie-breaker is very likely to be the data. Recent data has showed the US economy skirting recession and perhaps even gathering steam if you believe today’s data.
Looking at markets, do we really need additional liquidity? Stocks are in the upper third of the range they have been in for the post-Lehman era, bonds and mortgage rates are still near historic low yields. What good would QE3 do to lower unemployment levels that QE1 and QE2 did not?
To my mind, QE3 falls into the “In case of emergency break glass” category. If Europe implodes and you need to do something in response, go ahead, knock yourself out. Short of that, moving in December (as Santelli surmises) would be insane.
