The Recession Threat Is Growing Around The World, And Goldman Says The Fed Won’t Do Anything About It
June 21, 2012
Prior to yesterday’s FOMC meeting, Goldman’s Jan Hatzius was one of the most confident that the Fed would do QE.
Now Hatzius doesn’t see any QE on the imminent horizon.
This is what he said in a note this morning:
...the hurdle for additional balance sheet action in the next few months appears to be quite high. The fact that the FOMC took a “substantive” easing step today probably makes another easing move in the near term relatively unlikely. The reason is that the FOMC has not employed its unconventional tools in the same continuous fashion in which it used to move the funds rate. Chairman Bernanke today justified this strategy by saying that unconventional tools “by their nature…tend to be lumpy.” Although we do not see an obvious economic reason for why unconventional tools could not be used in a more continuous fashion, the chairman’s view implies that today’s action raises the bar for an additional easing move involving the balance sheet in the near term.