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The buzz these days is that the Fed is probably going to launch another round of “quantitative easing” stimulus, QE3, thanks to weakness in the economy and markets.But there’s always a chance that Bernanke and crew could get gun shy.
Arguably, the Fed is already failing at its mandate of stable inflation and full employment.
So the question is: Why are they being so wimpy? Are they worried about being branded as political?
Vincent Reinhart spoke with Zachary Goldfarb of the Washington Post about Fed action and the effect the election will have on what Ben Bernanke and the Fed decide to do in terms of quantitative easing. With the election nearing, the Fed has a thin line to walk on when making their decision.
Reinhart thinks the Fed will try to do the right thing, but there is one headline that Ben Bernanke is most worried about seeing.
“The headline they most worry about is ‘The Fed acts to help the incumbent.’ ”‘
Bernanke will try and do what is right for policy, but actions made between now and the election will be looked at through different lenses.
The last thing Bernanke wants to be is the Fed boss that blew Fed independence, by taking some action that invites more oversight and control from Congress.