A leading lobby group for the world's financial institutions is warning investors not to get caught flat-footed in emerging markets if rich-country central banks end their easy and cheap money policy of the past few years.
Quantitative easing is when the Fed buys securities in the hope of driving down interest rates -- ideally spurring more borrowing and spending. And this time, the Fed says it'll do it until the economy is back on track. But there are side effects to Dr. Bernanke's medicine.
Given an economy gaining steam and a vast expansion in the money supply, it's easy to assume a wave of inflation is up next. The causes of inflation, however, are anything but straightforward -- which is something investors need to remember.
When QE2 is complete, the Fed's bond purchases will have injected $1.7 trillion in liquidity into the markets since 2008 in an effort to boost corporate investment in new production and new jobs in the U.S. Instead, companies are taking cash raised here and investing it in emerging markets.
A day after announcing a second round of quantitative easing, Fed Chairman Ben Bernanke responded to critics in a Washington Post op-ed that explains how the program will work and why it won't spark inflation.
Kansas City Federal Reserve President Thomas Hoenig broke ranks with some of his fellow regional Federal Reserve executives Tuesday, warning against further monetary action as a way to spur economic activity.
Further monetary action by the Fed may be warranted because of high unemployment rates and low inflation, said Federal Reserve Bank of New York President William Dudley during a speech Friday at the Society of American Business Editors and Writers conference in New York.
Investors often seek insight from the latest news, the most recent weekly and monthly data updates. But the underlying status of the economy is better reflected in long-term trends, and many of those show serious headwinds to future U.S. growth.
There's talk the Fed may shift its benchmark interest rate to the rate paid on bank reserves from the overnight rate it charges banks. The change could mean higher interest rates for many loans, and especially most credit cards for which rates vary as the prime rate goes up and down.
