Scott Barber

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QE3 off?

February 29, 2012

Markets seemed to have been expecting more specific reference to possible further monetary easing in Ben Bernanke’s speech to the House of Representatives Financial Services committee today. Bernanke took note of economic improvement, backed up today by a stronger than expected Chicago PMI.

Obviously challenges still remain,  for example Bernanke pointed out that “The job market is far from normal,”.  However if you simply plot the Midwest business barometer against changes in the Fed Funds rate as shown in the chart below,  in more ‘normal’ times you would expect the discussion to be around rate increases at this stage rather than further easing.