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Wednesday, April 4, 2012

Gold Price Tumble, Fed Minutes Signal Lower Odds of QE3

A recap of the most recent Federal Open Market Committee (FOMC) meeting, the Fed minutes indicated that the odds of a third round of quantitative easing (QE3) in the near future have been meaningfully reduced. posted the following summary the minutes:

There was less interest in another round of asset purchases, commonly known as quantitative easing at the Federal Reserve’s policy meeting in March, according to the minutes released on Tuesday. At the meeting, only a couple of members suggested that more easing could become necessary if the economy lost momentum. At the previous policy meeting in January, a “few” Fed members thought the central bank could start adding more long-term securities before long and “a number of participants” indicated they were open to the idea if the economic outlook deteriorated. The Fed officials thought that the economy was a “bit stronger” but had not changed the outlook in a material way. While recent job numbers has been encouraging, a number of Fed officials said there was a risk that improvements could diminish as the year progressed, as happened in the last two years. The minutes reveal that the Fed discussed more ways to communicate their views to markets but made no decisions.


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