Well done to Tim Johnson, chairman of the Senate Banking Committee, for asking Ben Bernanke the direct question that finally let him spell out his position on QE3. That position was clearly implied by his comments yesterday and the minutes of the June FOMC meeting but Mr Bernanke’s reply today made it explicit. Bold is mine.
JOHNSON: The Fed, to its great credit, has pursued policies to stimulate the economy. However, although the Fed continues to hold short-term interest rates near zero, it has ended efforts to reduce longer-term rates through quantitative easing. Given the high rate of unemployment and relatively slow growth in output, why not start a new round of easing, a QE3? Read more