the Fed’s cautious signalling toward ending QE at Jackson Hole achieved the seemingly impossible by not only preventing a repeat of the markets’ 2013 “taper tantrum,” but by actually easing financial conditions, via lower real interest rates, higher stocks and a cheaper dollar. (File pi shows US Fed's Jerome Powell speaking at Jackson Hole.)
THE Federal Reserve (Fed) has met the historic challenge of navigating the world’s largest economy through a pandemic. But as the central bank prepares to reduce its emergency Covid stimulus, finding the next normal – for monetary policy, markets and the economy – will be its greatest test yet.
In achieving a robust recovery, the latest round of quantitative easing (QE), the fifth in the last decade, has seen the Fed’s balance sheet expand by some US$4 trillion (RM16.59 trillion), equivalent to 20% of the United States gross domestic product, since March 2020.
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