Sunday, December 22, 2013

Roubini : The ECB to Start its own QE after The FED 's Taper

 Nouriel Roubini, co-founder and chairman of Roubini Global Economics LLC, told Switzerland’s Finanz und Wirtschaft that Germany’s Bundesbank was unlikely to oppose the ECB starting a quantitative easing programme. The paper reported Roubini as saying that while the Fed will begin to taper its QE next spring at the latest, the ECB will be forced into its first QE measures at some point next year, no matter what the Bundesbank says.Some economists are seeing the Fed as caught in its own trap. If the macro data improves, monetary conditions worsen via rising yields (as investors switch from risk-free government debt to more risky assets), and the central bank refrains from tapering. Conversely, if the data disappoints, the Fed can’t taper either. Asked about his view, Roubini maintained his conviction that tapering will become a reality sometime between January and March. Roubini also recalled that since last May, when the Fed first started to coach markets on the notion that its unconventional monetary policy would not last forever, the central bank has also been obliged to reassure the markets that low yields would endure after the start of tapering, via the “forward guidance” mechanism.
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 Nouriel Roubini
 Nouriel Roubini

Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics
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