Thursday, June 23, 2011

The Fed (US Federal Reserve) Leaves Door for QE3 - 23 June 2011

The Fed (US Federal Reserve) Leaves Door for QE3

The Federal Reserve completes this month its $600-billion QE2 program. However, the Fed’s Chairman Ben Bernanke left open door for new round of monetary stimulus in case American economy doesn’t rebound. 


According to Bernanke, US will soon get rid of constraints from elevated energy prices and disruptions to manufacturing caused by Japanese earthquake. 

However, the nation is still facing such severe issues as declining home prices, high unemployment and weaknesses in the financial system that pose risks for its recovery in the longer term.

The Fed’s head also said that the prospects of American economy depend on what will happen to Greece as the country’s default will affect global financial markets.

The Fed left yesterday its benchmark interest rate in range of 0-0.25% where it’s been since December 2008. Bernanke pointed out that borrowing costs will remain low for an extended period that means at least for another 2-3 FOMC meetings.

US economic growth slowed down from 3.1% in the final quarter of 2010 to 1.8% in the first 3 months of this year. The unemployment rate rose to 9.1%.

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