Dovish Talk may be More Powerful than QE

Two Federal Reserve economists are telling the Street what it already suspected: Dovish talk may be even more powerful than quantitative easing.

In a research note, the economists wrote that the Federal Reserve’s asset purchases, or quantitative easing, probably provided a “modest boost to economic growth and inflation.” However, the effects of QE would depend in large part on the Fed’s interest-rate guidance, the note said.

“Estimates from a macroeconomic model suggest that such interest- rate forward guidance probably has greater effects than signals about the amount of assets purchased,” the economists wrote in the paper, released by the San Francisco Federal Reserve.

CNBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.