Tuesday, August 9, 2011

Rogoff: Fed Will Move Aggressively, More QE

Global markets continue to plunge and oscillate wildly today. Expect more fireworks in the afternoon: The Fed is scheduled to release a statement at about 2:15 p.m.

Harvard University economist Kenneth Rogoff, who attended graduate school with Ben Bernanke, says the Federal Reserve will likely start a third round of large-scale asset purchases, moving “more decisively to secure the U.S. recovery".

No wondering gold keeps skyrocketing.

“They certainly should do something right away,” “hard to know” if Bernanke would immediately be able to gain the support of Federal Open Market Committee members.

“Out-of-the-box policies are called for, especially much more aggressive monetary policy, however unpopular that may be,” "The Fed is “going to move more decisively,”.

The Bloomberg reports says that Rogoff recommended the Fed say in “very clear statements” that it’s trying to create “moderate inflation.” “In the classic classroom QE, it’s open-ended,” Rogoff said. “You say, ‘I’m trying to create inflation of, let’s say 2 or 3 percent, and I’m going to do whatever it takes.’”

The Fed should also avoid repeating that officials are trying to boost stocks, Rogoff calls that a “bad idea.”

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