PIMCO’s Mohamed El-Erian has issued an important reminder for anyone who thinks Bernanke isn’t tightening monetary policy just because he plans to keep interest rates flat for an extended period.
There are other fed actions, beyond the interest rates, that will tighten policy.
At the end of March, the Fed’s $1.25 trillion mortgage-backed security purchasing program will end.
That’s a huge form of credit tightening, says El-Erian, since it removes massive liquidity from this market.
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