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IPFS News Link • Federal Reserve

When You Get An Email Like This From The Fed, It May Be Time To Panic

• https://www.zerohedge.com, Tyler Durden

As we explained in detail, the main reason why the Fed should be concerned, is that according to a research report from BofA's Marc Cabana which we used extensively in the report, the Fed may be forced to launch Quantitative Easing as soon as Q4 to provide the market with the much needed liquidity, or else suffer the consequences of a major liquidity shortage. To wit, in describing the various steps the Fed can engage in, this is what the BofA strategist said:

Outright QE: after OMO dealer capacity is exhausted the Fed may need to start permanently expanding its balance sheet. The Fed would likely describe this as offsetting "bank reserve demand and growth in other non-reserve liabilities". Regardless, it would represent the Fed permanently buying USTs outright to maintain control of funding markets well above the ZLB.


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