Fed News Friday: Low and Behold!
May 20th, 2011You guys should really start thanking us for giving you the news and predictions well before they actually come to pass. I mean c’mon we are getting pretty good at this.
So QE2 is nearing its end next month. As most economists have insinuated, the stimulus from the Federal Reserve has propped up the economy but has contributed little to unemployment. Growth has been sluggish, at best, and the Federal Reserve is now formulating plans on putting some of that toothpaste back into the tube.
As we mentioned in a previous post, the Federal Reserve only has two options to “control” inflation and promote a sound economy: raising or lowering interest rates or printing money. Since the whole printing money gig didn’t work, looks like we are on to the only other option. Those convenient little 0-0.25% interest rates are about to take a trip upward and businesses will surely feel the shock.
New York and Chicago Fed presidents are both pushing for some more “easy money” as they see their big cities approaching financial calamity. I think the chances of QE3 at the moment seem relatively low because of all this talk on tightening up, however I wouldn’t put it past them in the coming months.
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