In a piece today in the Wall Street journal from Jon Hilsenrath, he notes that Fed officials have been struggling managing expectations about its plans for the $85Bn a month quantitative easing program. Hilsenrath compares expectations of the current QE program (from the New York Federal Reserve primary dealer survey) in January and March to expectations as of late April – and says there is concern within the Fed that the market ‘may have gotten ahead of itself ‘ in expecting too much from the program.
He says:
Many Fed officials expect growth and employment to pick up later in the year, and many don’t expect the inflation slowdown to last.
And that
Fed chairman Ben Bernanke’s reset market expectations when he told the Joint Economic Committee that the Fed might start winding down the program within the next fed policy meetings. The Fed’s hawkish meeting minutes amplified the point.
Fed Wrestles With Market Expectations About Pace of QE, NOT gated
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Interesting article. Published on a holiday Monday. The way I read it, its pretty bearish for US equities, and may well trigger some USD strength.
