From the Federal Reserve’s very own Buddy Franklin (used to be a hawk now he’s a swan dove, but that’s where the similarity ends), Narayana Kocherlakota, president of the Minneapolis Fed – he said in a speech overnight that the biggest driving force in bond markets is investors’ push for “safe” assets:

  • The FOMC is confronted with a greater demand for safe assets and tighter supply of safe assets than in 2007,” he said. “As a result, the FOMC has to lower the real interest rate to achieve its objectives.”

In saying that “the biggest driving force” is the flight to safety Kocherlakota seems to be saying that QE was mainly about providing safe assets, not an attempt to provide stimulus?

More at the Wall Street Journal: Fed Kocherlakota Goes Out On A Monetary Policy Limb, Again (ungated)