QE III: I’ve got yer certainty for yah rightcheah

QE III: I’ve got yer certainty for yah rightcheah

by digby

Contrary to what one of the sages on MSNBC exclaimed yesterday when insisting that the only answer to our economic woes was to slash spending, it turns out that no, Ben Bernanke is not “out of bucks.”:

The Fed’s statement announcing its third round of quantitative easing is out. The big story is that they will buy $85 billion in new assets, including $40 billion in mortgage-backed securities every month until the end of the year.

The key here, which differentiates this from QEI and QEII, is that the commitment is open-ended — the Fed has committed to continuing the buys if the economic situation is not significantly improved at the end of the year. Jeffrey Lacker, president of the Richmond regional bank and a noted inflation hawk, was the only vote against.

In addition to the QE announcement, the bank stated it will maintain its interest rate range of 0 to 1/4 of a percent until mid-2015, a later date than their previous commitment to keep rates low through 2014. Also new is the bank’s commitment to keep policy easy even after the recovery has gotten stronger: “The Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens.”

Not being a Fed expert I’ll await the analysis of those who are to see if this is adequate under the conditions set forth in Mike Konczal’s most excellent (and entertaining) primer on the Fed’s lackluster results from QEI and QEII. But at first glance, it seems very promising. The open-ended nature of it is what people have been clamoring for and the commitment to continuing even after the recovery takes place is a very significant change of direction.

If you wanted some certainty from the Fed, it looks like you’ve got it.

I’m sure the conservatives will now say the Fed is in the tank for Obama, but who the hell cares?

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