Evaluating QEII: A Rationale to Exit
Fortunately, QEII has not jarred market expectations; mark that up to the lingering low inflation – a typical cyclical pattern following recession. Now, with economic performance clearly improving and inflation rising, the risks of this unprecedented monetary expansion are increasing. Consequently, the Fed must set out an exit strategy, including a framework for managing reserves and normalizing interest rates.
Fortunately, QEII has not jarred market expectations; mark that up to the lingering low inflation – a typical cyclical pattern following recession. Now, with economic performance clearly improving and inflation rising, the risks of this unprecedented monetary expansion are increasing. Consequently, the Fed must set out an exit strategy, including a framework for managing reserves and normalizing interest rates.
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