Photo: Bloomberg TV
When investors aren’t worrying about Europe, they’re betting on the prospect of a new round of quantitative easing from the Federal Reserve.Particularly soft CPI and employment data this morning brought back the on again off again debate over whether the Fed could initiate a new round of easing measures at its meeting next week, but Bank of America Merrill Lynch senior economist Michelle Meyer told Bloomberg TV today that her team just doesn’t see a new round of QE so soon:
“We don’t think we’ll see additional action next week, but we do think it’s going to be a very dovish statement. So we think that the Fed will be setting the stage for another round of accommodation. We think that another big round of QE will come either in the August 1 meeting or on September 13th.”
In the mean time, Meyer predicted that a slowdown in price growth, as evidenced by the latest CPI data out this morning, “is going to provide some much needed support for consumers,” particularly since gas prices have come down from highs earlier this year.
“The problem is that you also have the drag from continued slow income growth,” she explained. “We think that labour conditions are absolutely going to worsen over the rest of the year.”