Friday, November 23, 2012

Why QE3 Will Not Sail

With Friday’s weak jobs report, many are now anticipating a third round of quantitative easing (QE3) by the Federal Open Market Committee (FOMC). Speculation about QE3 stems from the fact that the Federal Reserve has a dual mandate from Congress to promote price stability and maximum employment. Many people think that the Fed will have to initiate another round of QE based on the current labor market because the country is growing at a below-trend rate and unemployment is above the natural rate.

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