Quotes From Fed Presidents on Ending QE2 (Excess Reserves, Monetary Base Charts)

Excess Reserves of Depository Institutions and
St. Louis Adjusted Monetary Base (St. Louis Fed)
Since all eyes are on the Federal Reserve to see if they will vote to end, or extend, quantitative easing (QE2/Treasury bond purchases), below are quotes from Fed Presidents last week. I threw up a chart showing excess reserves and the monetary base, as well as an excerpt from John Hussman's weekly market comment on QE2 (3/28/2011).

After reading what the five Fed Presidents had to say, it seems likely that the Federal Reserve will end its bond buying program after QE2. We shall see. Thoughts?

Philadelphia Federal Reserve Bank President Charles Plosser's speech on 3/25/2011 titled "Exit":

"If this forecast is broadly accurate, then monetary policy will have to reverse course in the not-too-distant future and begin to remove the massive amount of accommodation it has supplied to the economy. Failure to do so in a timely manner could have serious consequences for inflation and economic stability in the future. To avoid this outcome, the Fed must confront at least two challenges." (continue reading at philadelphiafed.org)

"I don't think that is necessarily imminent, but we have to be very careful we don't get behind the curve," Plosser said, as he warned of the relative fragility of the Fed's inflation fighting credibility among the broader public." (via Dow Jones Newswires after his speech)

Dallas Fed President, Richard Fisher:

"In essence what we have done as a central bank is to monetize the entire US debt through the end of June. Had I been a voter last year, which I am this year, I would have joined Hoenig and would have voted against what is known as QE2. In my opinion, no further accommodation is needed after June -- either by tapering off the bottom of the purchases of Treasuries, or by adding another tranche of purchases outright. In my view it is unlikely that we will have or need more accommodation by the central bank. I think we've done our job." (via John Hussman's Weekly Market Comment)

St. Louis Federal Reserve Bank President, James Bullard:

“If the economy is as strong as I think it is then I think it may be reasonable to send a signal to markets that we’re going to start withdrawing our stimulus, and I’d start by pulling up a little bit short on the QE2 program,” Bullard said. “We can’t be as accommodative as we are today for too long, we’ll create a lot of inflation if we do that.” (continue reading at Bloomberg)

Chicago Federal Reserve Reserve Bank President Charles Evans:

"Following through on that to the tune of $600 billion, like we've said, I think is appropriate," Evans told reporters in a joint interview at the regional bank's headquarters. "I personally don't see as many needs for a further amount, as I probably thought last fall." (continue reading at Reuters)

Atlanta Federal Reserve President Dennis Lockhart:

Asked about the chances of another round of quantitative easing, often referred to as QE3, Lockhart said: "It's a high bar." (continue reading at Reuters)

For more analysis read John Hussman's new weekly comment:

"Last week, a number of Fed officials came out in tandem with essentially the same message - the Fed's policy of quantitative easing is likely to end with QE2. It's important to think carefully about the implications of this for the markets. My impression is that investors are still in something of a "momentum" mentality both with respect to the market and the overall economy, and it's not clear that they've pieced out the extent to which this has been reliant on various stimulus measures that are now drawing to a close." (continue reading - QE2 - Apres Moi, le Deluge)

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