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Low Inflation Is Latest Stat Pointing To QE2

Friday, October 15, 2010 - 5:10 PM
From today's news release from the Bureau of Labor Statistics:
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in September on a seasonally adjusted basis
The index for all items less food and energy was unchanged in September, as it was in August.

From the New York Times:
The consumer price results for September were slightly below analysts’ forecasts, which had called for a 0.2 percent rise in September and a 0.1 percent increase in the core index.

The figures were the latest in a series of economic indicators this week suggesting that growth would continue to be sluggish for the rest of the year

This and other articles are quoting opinions from economists that QE2 is a "done deal" with the Fed making the announcement in its next meeting on Nov 2-3.
Ken TuminKen Tumin5,471 posts since
Nov 29, 2009
Rep Points: 125,634
1. Saturday, October 16, 2010 - 12:12 PM
What is QE2?  I always thought that stood for the cruise ship Queen Elizabeth2.
dunkerdunker136 posts since
Jun 11, 2010
Rep Points: 413
2. Saturday, October 16, 2010 - 1:19 PM
I'm afraid I've been reading too many articles from economists. Sorry about that.

Here's an excerpt from Wikipedia's entry for Quantitative Easing (QE):
The term quantitative easing (QE) describes a monetary policy used by central banks to increase the supply of money by increasing the excess reserves of the banking system. This policy is usually invoked when the normal methods to control the money supply have failed, i.e the bank interest rate, discount rate and/or interbank interest rate are either at, or close to, zero.

The 2 in QE2 refers to a second round of QE. The first round was started in 2008 during the financial crisis when the Fed purchased huge amounts of long-term Treasury bonds and mortgage-backed securities.
Ken TuminKen Tumin5,471 posts since
Nov 29, 2009
Rep Points: 125,634