The US Federal Reserve has announced another round of quantitative easing (QE) in a final attempt to stimulate the US economy.
This latest round of QE will be worth $600bn, around £372bn. Interest rates in the US are already at near zero, so printing money is the only viable option left to boost the economy.
Whilst the size of QE at $600bn is a little larger than many expected to see, the speed of the programme is slower. The Fed plan to buy assets at the rate of $75bn a month.
With unemployment in the USA at 9.2% and Congress now divided following the mid-term elections, this could be the last chance the Federal Reserve has to intervene with monetary policy and slow the pace of job losses.
Certainly the markets are likely to be disappointed that the Fed has not signalled any further QE after this round of purchases is complete.
In the UK, we are not expecting to see the Bank of England Monetary Policy Committee (MPC) announce any extension to their own £200bn asset purchase programme tomorrow.
Much of the recent economic data in the UK has been better than expected. The preliminary GDP figures for the period July to September were stronger than economists predicted and news today suggests that the services sector had a very good October.
Across the pond, this could be a last-ditch attempt by the US to get their economy moving. Investors will need to keep a watching brief on the impact for the global economy.
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