Consensus Is Moving Towards QE3 Getting Announced This Week

This one’s been a long time coming.  And it finally looks like we might actually get the official word on QE3. Analysts at several of the big research houses have now said this is the meeting where it’s going to happen.  JP Morgan analysts say:

“The debate about Fed action next week has been ended as a result of the weak August payroll report. Look for action on two fronts. The Committee will initiate a new round of asset purchases, with agency-MBS constituting some, if not all, of these purchases. The Committee should also push back its low-rate guidance from late 2014 to mid-2015, with this guidance possibly augmented to note that exceptionally low interest rates will be maintained even as the recovery progresses.

 

Such a statement would be a partial nod to the Evans rule. Although this is not our baseline view, movement toward an Evans rule—whereby policy is kept extremely easy until the unemployment falls below 7% as long as inflation remains below 3%—is likely to become the centerpiece of the next round of policy stimulus if the labor market remains soft as we turn into 2013.”

Read more: http://www.businessinsider.com/consensus-is-moving-towards-qe3-getting-announced-this-week-2012-9#ixzz263lg5KOe