Higher commodity prices, however, are a cost borne by businesses and consumers and this has mitigated the economic stimulus provided by prior bouts of QE. Higher equity prices, alas, can’t offset pain at the petrol pump and the supermarket for many consumers.
All that raises the prospect that introducing QE3 simply runs the risk of entrenching the economy in its post-financial crisis mode of a stop and start recovery.
In fact, advocates of QE3 are really betting that the Fed will err far more on the side of risking much higher inflation in the long run as it seeks to lower the unemployment rate towards 7 per cent.
Read it all.
(FT) Federal Reserve Injections can be hard habit to kick
Higher commodity prices, however, are a cost borne by businesses and consumers and this has mitigated the economic stimulus provided by prior bouts of QE. Higher equity prices, alas, can’t offset pain at the petrol pump and the supermarket for many consumers.
All that raises the prospect that introducing QE3 simply runs the risk of entrenching the economy in its post-financial crisis mode of a stop and start recovery.
In fact, advocates of QE3 are really betting that the Fed will err far more on the side of risking much higher inflation in the long run as it seeks to lower the unemployment rate towards 7 per cent.
Read it all.