Nouriel Roubini has said for a while that he expects QE3. He doesn’t think Bernanke will announce it at his Jackson Hole speech tomorrow but he expects it in the near term. In an interview with CNBC he explains why:
“I would expect QE3 would be implemented sometime later this year. Tomorrow he might not announce it, he has you know, Republicans in the House bashing him and saying, you gonna cause high inflation or debase the currency. He has the gang of three Kocherlakota, Plosser and Fisher against it. But the reality is that we are headed towards a recession and we are running out of policy bullets. And one of the few policy bullets left is more monetary policy easing or quantitative easing.
…Every economic indicator suggests we are already beyond a stall speed. We are at the beginning of an economic contraction at this point.”
Roubini said a crucial thing that people forget, is that at the last FOMC meeting, the Fed governors had said they had discussed a wide range of actions they could take if the economy weakened. So if economic data continues to stay weak that could be the ‘trigger on September 20 to take action’.
Watch the entire interview at CNBC: