Poll: What Do You Think Will Be the Most Likely Impact of QE3?
In a poll conducted earlier this week in the CFA Institute Financial NewsBrief, we asked subscribers what they thought would be the most likely impact of QE3.
With the announcement of a third round of quantitative easing, the Federal Reserve will begin buying $40 billion of mortgage-backed securities with newly printed money each month, or $480 billion per year. These transactions translate into an 18% year-over-year increase in the US monetary base.
Importantly, purchases will be made in the secondary market, which circumvents primary dealers, to some degree, so QE3 has an incrementally greater chance of making its way out of the banking sector into the broader economy. As a group, however, 48% of 1,177 professional investors who responded to this poll think that markets will adapt to the Fed’s action and stifle QE3’s main objectives of improving the job and housing markets. Coming in a close second, 40% of professional investors see the Fed’s action as stimulating inflation. Lastly, only 11% think QE3 will produce its intended effect.
Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.