terms and conditions

Posted: January 25, 2012 at 2:41 pm

The Federal Reserve has no more room cut interest rates.  About all it can do is to take the discount rate lower than the 0.75% but the target rate of 0.00% to 0.25% for Fed Funds is already a floor.  That leaves quantitative easing (QE) measures whereby the FOMC makes accommodative financial policies that have the same effect that lowering rates might hope to accomplish.  We have already had QE1 and now QE2.  The ‘operation twist’ where the FOMC went further out the yield curve to buy Treasuries was a light version of QE3.  So that was either QE-2.5 or QE3. 

In today’s annual outlook speech, Ben Bernanke has said that the FOMC is prepared to look at other...