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QE4 — Inevitable and Near Future?

Author

Listed:
  • Olga V. Koncevich

    (Financial Research Institute, Moscow 127006, Russia)

  • Vsevolod Y. Cherkasov

    (The Central Bank of the Russian Federation, Moscow 107016, Russia)

Abstract

Guided by theses of Janet Yellen’s speech on the Symposium on Monetary Policy Prospects which took place in August 2016 in Jackson-Hole (Wyoming) we seek to comment and explain more decisively the current state of play in policy instruments use by the Federal Reserve System (the Fed). At the same time, the much more important circumstance for timely understanding is that duration of a business cycle does not leave the Fed with large time margin to rise the interest rate to a level more appropriate to Taylor rule, and new round of quantitative easing becomes the possible scenario after passing of cyclical peak. “Farewell” to quantitative instruments of liquidity injection in the financial markets apparently becomes a question of even next cycle, and monetary effect of their application can be more extensive and remain longer than it is meant by the previous QE rounds. This outlook is worth the close attention of those economies in Europe and Asia, which currently also lean on quantitative tools as well as of the countries applying traditional toolkit, inter alia within inflation targeting framework.

Suggested Citation

  • Olga V. Koncevich & Vsevolod Y. Cherkasov, 2017. "QE4 — Inevitable and Near Future?," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 1, pages 114-127, February.
    • Handle: RePEc:fru:finjrn:170109:p:114-127
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    More about this item

    Keywords

    Fed; quantitative easing (QE); balance sheet policy; excess reserves; IOER; reverse repo; Taylor rule; business cycle;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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