Forget QE3, the Fed Might Have Something Better
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With even unconventional Fed tools showing little fruitfulness, Fed watchers should take heed that Bernanke & Co. are evaluating a new program that can help breath life into the stagnant U.S. economy courtesy of our friends across the pond.
Last week, in a joint move, the Bank of England and the Treasury there surprised markets with a 'funding-for-lending' program. While little details are available, the program will provide funding to banks over several years at rates below current market rates. Money can be lent against "the widest range of collateral." The program is expected to be structured to ensure that the banks then pass the lower costs to customers and boost the overall economy.
During today's press conference, Bernanke said the Fed is very interested in the program and are watching developments closely. With rates "zero bound," the Fed Chairman said they are evaluating alternatives ways to help stimulate growth.
This could potentially be one.
Under the potential program, bank customers could hypothetical get money at rates as low as the Treasury - or nearly free.
Last week, in a joint move, the Bank of England and the Treasury there surprised markets with a 'funding-for-lending' program. While little details are available, the program will provide funding to banks over several years at rates below current market rates. Money can be lent against "the widest range of collateral." The program is expected to be structured to ensure that the banks then pass the lower costs to customers and boost the overall economy.
During today's press conference, Bernanke said the Fed is very interested in the program and are watching developments closely. With rates "zero bound," the Fed Chairman said they are evaluating alternatives ways to help stimulate growth.
This could potentially be one.
Under the potential program, bank customers could hypothetical get money at rates as low as the Treasury - or nearly free.
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