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Tuesday, September 14, 2010

Goldman: Fed may announce QE2 as soon as November

by Calculated Risk on 9/14/2010 12:53:00 PM

From the WSJ: Goldman: Fed May Announce New Asset Purchases in November

“We don’t expect this at the Sept. 21 meeting, but in November or December there’s certainly a possibility that it will be announced,” Jan Hatzius, chief economist at the bank, said Tuesday. He added the Fed is likely to buy U.S. Treasurys worth around $1.0 trillion to kick-start the economy.
[Goldman] expects the U.S. unemployment rate to creep back up to 10% by early 2011 from 9.6% in August and to stay around that level for most of the year.
I think it will take more evidence of a slowing economy or further disinflation for Fed Chairman Bernanke to persuade other members of the FOMC to embark on QE2.

Perhaps the unemployment rate ticking up in the September employment report will be enough, but that is the only employment report scheduled to be released before the two day FOMC meeting in November (on Nov 2nd and 3rd). The October employment report will be release on November 5th - two days after the FOMC meeting.

The advance Q3 GDP report (advance estimate) will be released on October 29th, and if that report shows further slowing - that might be enough.