Economics
QE, or Not QE? Impact of Fed Bond-Buying Will Depend on Treasury
- Shift in Treasury sales to bills might depress long-term rates
- Powell insists Fed not undertaking quantitative easing
The Marriner S. Eccles Federal Reserve building stands in Washington, D.C.,
Photographer: Andrew Harrer/BloombergThis article is for subscribers only.
The Federal Reserve insists its planned hoovering-up of Treasury securities is a “technical” measure that isn’t quantitative easing and won’t meaningfully impact the economy. But that may depend on how the Treasury Department responds to the central bank’s plan.
If the Treasury reacts by stepping up its issuance of Treasury bills and cutting back on sales of longer-dated securities, that would tend to put downward pressure on long-term interest rates -- which is exactly what the Fed’s crisis-era QE programs were intended to do.