Could We Really See QE 3?

Focus returns to Ben Bernanke and Fed policy

Focus is returning to Ben Bernanke and the Federal Reserve. Tomorrow, Bernanke is expected to provide testimony before Congress on monetary policy and his expectations for the economy. However, there are indications that QE 3 could be a very real possibility.

Even with indications that economic recovery is picking up in the U.S., it appears that some members of the Fed are not so sure that it is time to end quantitative easing. GFT’s Kathy Lien addresses the possibility of QE 3 in FX360:

The most important questioned that investors want answered this week is whether the Federal Reserve is moving in a completely different direction from other central banks.  Recent comments from Fed officials including Fed President Bullard who appeared on CNBC this morning suggests that asset purchases could continue beyond June.

Of course, Lien continues, if the Fed announces that it will gradually wind down purchases, the U.S. dollar is likely to move even lower against the euro. The only way the dollar is likely to see a surge of strength is if Bernanke places emphasis on ending economic stimulus.

See Also

• Looking for U.S. Dollar Trends
  Forex trading on the currency market