Powered by Blogger.

We Have Move To...

2011-06-07

For QE3 to materialize, the U.S. economy must undergo “a meaningful rise in the unemployment rate or flat unemployment coupled with a sharp fall in co


For QE3 to materialize, the U.S. economy must undergo “a meaningful rise in the unemployment rate or flat unemployment coupled with a sharp fall in core inflation and inflation expectations,” according to Goldman Sachs chief U.S. economist Jan Hatzius.

In a recent report, the Goldman Sachs economist presented his thoughts on the potential for QE3, in light of the substantial wave of disappointing U.S. economic data of late.

“Sure enough, markets that not long ago were predicting rate hikes are now starting to debate QE3,” Hatzius wrote. “But we believe that the Fed’s ‘zone of inactivity’ is much wider than these wild swings might suggest. The hurdle for rate hikes is high, and we feel good about our long-standing view that the funds rate will remain at its current near-zero level until 2013.”

“But the hurdle for QE3 is also high, and indeed much higher than it was for QE2. First, the perceived cost of QE3 is higher because inflation has accelerated. This reflects the fact that at least some of the weakness in growth this year is due to higher commodity prices, i.e. akin to a supply shock. Second, the perceived benefit from QE3 is lower.”

“Fed officials viewed QE1—defined as the overall balance sheet extension that started in late 2008 and ended in early 2010—as a resounding success, and that was probably one reason why they were fairly quick to climb aboard QE2. But they are much less confident that QE2 made a big difference; while it probably did help financial conditions ease and the economy grow a bit more quickly than it otherwise would have done, it’s hard to argue that the effect was large. That has to color their expectations for what QE3 might deliver.”

“And third, the backlash against QE2 both domestically and abroad was greater than Fed officials had anticipated, and they are not keen to subject themselves to another round of similar criticism.”

0 comments:

Related Posts Plugin for WordPress, Blogger...

PostRank

My Blog List

Blog I Follow

Popular posts

Blog Archive

Templates

Stock Quote

Stock Quotes
KLCI Live Quotes
Lookup Stock Code/Name
Enter Stock Code/Name
FastQuote

Powered by zoomFinanceCorp.

Subscribe Now: Feed Icon

Home Page Home Page Home Page Home Page Home Page Home Page

Investment Idea

My investment with RM5,000 initial capital have been growing since 2005.I found the stock market appears confusing and complicated, but it is most definitely based on logic "supply and demand". However, the laws of supply and demand as observed in the markets do not behave as one would expect. To be an effective trader, there is a great need to understand how supply and demand can be interpreted under different market conditions and how to take advantage of this Off Market Transactions in KLSE.

Malaysia Gold Price

Gold Price Per Gram in Ringgits
Malaysian Ringgits per Gram

  © Free Blogger Templates 'Greenery' by Ourblogtemplates.com 2008

Back to TOP