The changing landscape may prompt Fed policymakers at their December 15-16 meeting to describe in more detail their plans for the coming months. It likely means firmer promises about the pace and type of government bond purchases, or quantitative easing, that the Fed will use to keep borrowing costs low, analysts said. Even on its own, Mnuchin’s decision to let several Fed emergency programs expire next month “will tighten financial conditions ... at the wrong moment,” said Krishna Guha, vice president of Evercore ISI. Qe as main leverOptions on that front include changing the mix of government bonds that the Fed buys each month, increasing the current $120 billion in bonds being purchased, or both. With the looming end of the crisis programs, purchases of government bonds are now the main lever the Fed can pull to change credit conditions.

Source: Dhaka Tribune November 23, 2020 13:52 UTC