Will the Fed turn back to QE if the economy really starts to stumble?
Ok, let me be clear first off. I don't think there's any reason to hit the panic button on the US economy but I want to gather your opinions. Let's look at things hypothetically.
If the economy wobbles along at the current rate then we're likely to see interest rates stay on hold. If the economy drops back further then the market is going to be signing the QE song again.
Here's a couple of questions then, a mini poll.
- Could the Fed go back to QE?
- Would the Fed go back to QE?
- What else could they do?
I'm 50/50 on whether they could go back as that would send global markets potty
I don't think they would go back to QE as they are already up to their eyeballs in it and running another 1 or 2 years of it would tip them over the edge
Ultimately they could tinker around the edges but that might be their limit and they would have to just let the economy heal itself. Perhaps that's something they should have done in the first place. Unfortunately the Fed doesn't point the finger towards the government/s as much as the ECB does and that's another problem entirely.
So what say you ForexLivers?