Perception of Powell Put in place – QE4 looms

CountingPips/Murray Gunn/4-11-2019

“For better or worse, the markets perceive that Fed chairman Powell has showed his hand. The recent Federal Open Markets Committee (FOMC) minutes of the January meeting revealed almost unanimous agreement to announce a plan soon for ending the Fed’s policy of balance sheet reduction. This is the first step in an inevitable march towards the fourth round of quantitative easing (QE4).”

USAGOLD note:  More and more analysts are raising the prospect of QE4. The real discussion on monetary policy is now conducted under a new set of terms, conditions and defintions that the public largely does not understand (or even care about for that matter). As the Fed shrinks its balance sheet, money is drained from the banking system. If it were to expand it by introducing QE4, it would pump money into the system and that, of course, is what the White House would like to see prior to the 2020 election.

 

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