MICHELLE MEYER: QE Is Not Imminent And Sterilized Bond Purchasing Is Unlikely

michelle meyerMichelle Meyer

Photo: Bloomberg via YouTube

The Federal Open Market Committee (FOMC) meets next week to discuss monetary policy, set target interest rates, and offer some guidance into their next moves.Michelle Meyer, an economist for Bank of America Merrill Lynch, spoke with the team of CNBC’s Money in Motion and offered a preview.

“I think they’ll make it very clear that the Fed’s in wait-and-see mode, which has been the case for some time,” said Meyer.  “For some reason a lot of market participant were expecting imminent QE3, which I don’t think will happen now that the data is coming in a little bit better.”

But this doesn’t mean that Meyer has completely ruled out the possiblity of any monetary easing any time soon.

“In our review, the Fed is going to want to continue it’s current stance of policy, with Operation Twist through the end of June, maybe pause, have a neutral policy, and reinvest the maturing assets,” said Meyer.  “If the economy slows and if growth starts to come in weaker, then they’ll go ahead with QE3.  So it’s really a second or maybe even a Q4 story.”

Andy Busch asked for her thoughts on a sterilized bond buying program as reported earlier this week by the Wall Street Journal’s Jon Hilsenrath.

She said she wasn’t surprised that they would consider such an option.  However, she doesn’t think it’s their baseline view either.

“We think its more likely they will do QE type programs.”

SEE ALSO: Michelle Meyer’s Housing Outlook For 2012 >

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.