November 03, 2021

QE: The End Is Nigh

QE is no longer having any marginal benefit for the economy. It has become the equivalent to “pushing on a string”. Additional QE is not supporting bank lending or broad money growth. Instead, the rapid growth in bank reserves is creating difficulty for the Fed in keeping short-term interest rates within its desired range. The Fed is very likely to announce a tapering of QE before year-end. What will it mean for investors? Are fears of another “taper tantrum” justified?