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U.S. Fed Is Twisting To Exhaustion, Can QE Be Far Behind?

ByThe National Bank of Canada
Published 06/21/2012, 07:31 AM
Updated 05/14/2017, 06:45 AM

The Federal Reserve opted to extend Operation Twist through the year-end in order to fight against the current economic deceleration. In essence, the Fed is pledging to do the twist to exhaustion since it will have run out of short-term securities by the time the $267 billion program extension announced today expires. This means that other policy tools will have to be considered if the economy and labour markets fail to improve. As such, another round of quantitative easing (QE) should not be ruled out. As today’s Hot Chart shows, the U.S. monetary base has been relatively flat since middle of last year after increasing more than threefold since the 2008.
U.S. Fed Is Twisting To Exhaustion, Can QE Be Far Behind

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