Economists React: Don’t Expect QE3 This Week


Nicole Hong
blogs.wsj.com
July 30, 2012

Weak U.S. data and mounting euro-zone concerns have raised expectations that the U.S. Federal Reserve will embark on another bout of bond-buying to stimulate the economy.

But Fed watchers surveyed by Dow Jones Newswires generally feel the central bank isn’t ready to launch a third round of so-called quantitative easing, or QE3, just yet. Most say they believe such an announcement is unlikely at Wednesday’s conclusion of the Fed’s two-day policy meeting.

A key factor in that cautious assessment: Friday’s report that U.S. gross domestic product expanded at an annual rate of 1.5% in the second quarter. Although that is far from a stellar economic performance, it beat forecasts of a 1.4% gain and, for many, was strong enough to suggest the Fed’s Open Market Committee would wait rather than pull the QE3 trigger at this week’s meeting.

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