Why QE2 is destined to fail

clock

F&C's Ted Scott explains why he thinks QE is a victim of a classic liquidity trap

As widely predicted, the Federal Reserve announced on 3 November it would implement a second round of QE. The amount was slightly more than expected at $600bn but will be spread over several months to the end of June 2011, with the average purchase of assets at about $75bn per month. The Fed also stated its purchases would be concentrated in the two-and-a-half to 10-year duration range of treasury bonds with an average maturity of five to six years. Importantly, the statement left the total amount of QE open ended, implying, if necessary, further tranches of asset purchases will be...

To continue reading this article...

Join Investment Week for free

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Economics

Trustpilot