Friday, September 18, 2015

QE4 is not far-off, recent QE approach insufficient – Swissquote

FXStreet (Delhi) – Yann Quelenn, Market Analyst at Swissquote, suggests that the zero interest-rate policy and quantitative easing approach has proven inefficient and as data has been coming in mixed and still believe that quantitative easing 4 is not far off.

Key Quotes

“The FOMC decided to leave its rates unchanged at 0%-0.25%. Fed Chairwoman Janet Yellen stated that despite the improvement in the labour market, the Fed is still concerned by the fact that inflation sits well-below the longer-run objective of 2%. She added that lingering oil prices and lower import prices added downside pressure to inflation.”

“Yellen added that even if a rate hike happens, monetary policy will remain accommodative. This really shows how worried the Federal Reserve is concerning the sustainability of the so-called U.S recovery. However, it transpires that Fed members have in fact increased their projections for economic growth this year, which is now expected to hit 2.1% this year and 2.3% in 2016.”

“The USD-complex has been weakened after the announcement even if the markets had partially priced in a “no hike”. Nonetheless, new expectations will emerge for October and December and strong beliefs around the world’s first economy are still alive and will sustain the dollar at a strong level.”
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