情勢永遠比實際看到的還嚴重

Fed's QE2 programme could grow to US$1.5 trillion, say analysts
By Jonathan Peeris | Posted: 10 November 2010 2104 hrs

	Photos 1 of 1 The US Federal Reserve building in Washington, DC
	Video Fed's QE2 programme could grow to US$1.5 trillion, say analysts

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SINGAPORE: Analysts expect the US Federal Reserve to pump more cash into the economy if its US$600 billion bond-buying plan fails to prevent deflation.

Some market watchers said the Fed's so-called quantitative easing (QE2) programme could eventually grow to as much as US$1.5 trillion.

High unemployment and fear of deflation have already prompted the US Federal Reserve to take action.

Some market watchers said the use of quantitative easing to stimulate growth may last for some time - despite the criticism levied at the US by other countries, including China.

Kevin Logan, Chief US Economist with HSBC, likened the Fed's move to a leaky bucket.

"It's almost as if the Federal Reserve is trying to put out a fire with a leaky bucket, but it's the only bucket it has. So they're going to try and continue to throw water on that fire, but meanwhile the liquidity leaks out.

"Is the Fed being reckless? I don't think so. As I said, the earlier programme was quite successful in stabilising the financial markets and the housing market."

Critics of the programme said that liquidity may leak out of the US and cause asset bubbles in emerging markets where prospects for economic growth are stronger.

That may not do much to spur growth, prevent deflation or bring down unemployment in the US, analysts said.

Mr Logan, though, is more optimistic.

"The easing programme by the Federal Reserve should at the margin, pick up the rate of growth, up to about three per cent, a bit more by the end of next year, between three and 3.5 per cent.

"However that's not very fast for the US economy and it's not going to bring down the rate of unemployment very much. It's at 9.6 per cent today, I would expect in a year's time, it will be at 9 or 8.9 per cent, that's lower certainly but still very high by historical standards."

He added that the next six months will be critical.

"If the jobless rate does not come down and bank credit remains depressed, the Fed may inject more liquidity into the banking system...using the same leaky bucket."

-CNA/ac