The Fed Is About To Get The Green Light For QE3

Yesterday the buzz about QE3 began in earnest, when a group of former Fed officials said that if inflation were to dissipate, then the Fed would likely have the green light to start easing again.

So, will inflation go away?

Almost certainly. There’s still plenty of slack in the system, loan growth remains mediocre, and the commodity inflation that characterised the most recent bout of inflation is dying by the minute.

Crude oil has come way off its recent highs.

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Meanwhile, check out the prices paid component for the ISM.

It too is dropping like a knife.

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Here’s the same for the non-manufacturing ISM.

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Technically, headline inflation as measured by the CPI remains hot, but that just can’t last much longer per the other data.

 

 

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