Tuesday, October 26, 2010

Report: Fed will probably use gradual approach for QE2

by Calculated Risk on 10/26/2010 11:21:00 PM

QE2 is coming. The only question is if the Fed will announce a fairly large amount of purchases on November 3rd (like $500 billion), or a somewhat smaller amount and revisit the purchases at each FOMC meeting. It sounds like the Fed might take the 2nd approach ...

From Jon Hilsenrath and Jonathan Cheng at the WSJ: Fed Gears Up for Stimulus

The central bank is likely to unveil a program of U.S. Treasury bond purchases worth a few hundred billion dollars over several months, a measured approach in contrast to purchases of nearly $2 trillion it unveiled during the financial crisis.
This is the approach the NY Fed's EVP Brian Sack described earlier this month: Managing the Federal Reserve’s Balance Sheet

It is hard to call "a few hundred billion dollars" a gradual approach, but this is less than current expectations for the Nov 3rd FOMC announcement.