The Federal Reserve: Ultra Low Interest Rates For Another Two Years &Nbsp; Ready For The Third Round Of Easing.

The Federal Reserve announced on 9 may the federal fund.

For the first time, clear the ultra-low interest rate schedule.

The Federal Reserve issued a statement after a regular meeting on monetary policy held on the same day, pointing out that the recovery rate of the US economy was significantly lower than that of the Federal Reserve. The labor market has deteriorated in recent months, and the consumption desire of residents is weak, and the real estate industry is still weak.

The statement said that in the next few quarters, the US economy will grow slower than before.

To cope with the financial crisis and stimulate economic recovery, the Federal Reserve has kept the federal funds rate at a historical low of 0 to 0.25% since December 2008.

Before this, how long will the price monetary policy tool last? The Fed often uses vague terms like "going on for a while".

The 9 day is the first time that it has made clear its position to give ultra-low interest rate timetable.

The Fed also announced that it would continue to expire on the same day

If the ultra-low interest rate in the United States reaches the middle of 2013, it means that the US low interest rate policy will last for four and a half years.

Although the Fed did not announce a new round of quantitative easing on that day, the Federal Reserve announced that it would reinvest the principal of its mature treasury bonds to buy US Treasury bonds, while maintaining a historically low interest rate unchanged, which could be regarded as a compromise version of quantitative easing policy.

Open the door for the third round of quantitative easing

Analysts believe that the US Federal Reserve's announcement of this policy in the context of knowing that the ultra loose monetary policy is effective or ineffective in the recovery of the real economy is to a large extent inevitable, otherwise it will shoulder the responsibility of not watching the recession risk.

Lawrence Summers, former US economic adviser to President Obama, said that if the current US economic growth and current economic policies were adopted, it would be very difficult for the US unemployment rate to fall below 8.5% at the end of 2012.

The US economy grew by only about 1% in the first half of this year, almost stagnant. It also faced external risks such as the European debt crisis.

If the US government does not take any new measures to boost demand and stimulate growth, 1/3 of the US economy may fall into two recession.

At present, in the context of the US government's deficit reduction, the future operational space of fiscal policy will be further squeezed.

The US stock market has been down for several days. The ultra loose monetary policy of the Federal Reserve can temporarily reverse the decline of the capital market.

For the new round of quantitative easing policy, the Fed has also laid the foreshadowing in its statement.

The Fed said it will continue to pay close attention to the US economic recovery process and launch new initiatives to stimulate economic recovery if necessary.

Market participants believe that the Federal Reserve has opened the door to the third round of quantitative easing policy.