• Not primarily interested in Treasuries but the way they influence mortgage and corporate bonds
  • Influences short-term rates too
  • Fed wants to stimulate demand, raise inflation rate to 2% from 1% to lower real (inflation-adjusted) rates
  • Data and Fed forecasts will determine size (or need) for QE
  • Unemployment will fall quicker with QE than without
  • Disinflation bad, deflation worse