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QE3 cannot solve fundamental problem: Chinese Experts

(People's Daily Online)

16:02, June 25, 2012

The market is paying extremely close attention to the question that whether the United States will launch a third round of quantitative easing (QE3) soon.

The Market's anticipation on the QE3 has strengthened

The Federal Reserve is still holding the conference, but the market's anticipation on the QE3 has strengthened. On June 19, the three major stock indexes of the United States all went up. The Dow Jones Index rose by 0.75 percent, the NASDAQ Index rose by 1.19 percent and the Standard and Poor's 500 Index rose by 0.98 percent.

On June 19, prices of base metals of the London Metal Exchange (LME) almost all went up, and the LME Copper Index rose by 0.52 percent.

“Recently, the market's anticipation on the QE3 is very obvious,” Zeng Gang, director of the Bank Research Office under the Institute of Finance and Banking (IFB) under the Chinese Academy of Social Sciences (CASS) told People's Daily.
“Although there are almost no positive factors, U.S. stock markets have risen successively for several trading days. It indicates that the people generally believe that the U.S. Federal Reserve will launch the QE3.”

Zeng added that launching the QE3 is necessary for turning back the poor market confidence.

QE3 may be launched in a secret way

Although the people's anticipation on QE3 is strong, it is still uncertain whether the United States will launch it together with major central banks of the world or not.

According to Zeng's analysis, the economic situation of the United States is relatively not bad compared to these of other countries and therefore does not need to launch an economic stimulus policy urgently.

Zeng went on to explain that the unemployment rate of the Europe has reached between 10 percent and 20 percent, but it is only about 8 percent in the United States. Not long ago, the yield rate of the U.S. treasury securities reached the lowest level in history, and therefore, there is no need for the United States to launch the QE3. However, the G20 requires the whole world to fight against the economic depression jointly and save Europe, and therefore, the United States' monetary policy will still have a loosening trend but will not be as loose as the past.

The United States may launch its economic stimulus policy in a more hidden and secret way, Zeng said.

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Email|Print|Comments(Editor:厉振羽、张洪宇)

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wende at 2012-06-2571.255.88.*
QE3 will not solve as the political system is in a standstill. Inflation in US has caused food prices to increase by 20%. oil prices will be kept low to destabilize Putin.
  

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