Ben Bernanke announced Wednesday that the U.S. Federal Reserve will not taper off QE3 after all after the latest Federal Open Market Committee meeting. QE3, a term that refers to the third round of quantitative easing, is a monetary policy technique in which the Federal Reserve drives down the interest rates at which banks and corporations can borrow money by purchasing U.S. treasury bonds in huge quantities. In theory, lower interest rates encourage economic growth by making credit more available.
After the previous FOMC meeting, Bernanke hinted that QE3 would start to taper toward the end of this year, and stocks fell on the news. But going by his statements on this FOMC meeting, tapering in the current year is highly unlikely.
“QE3 will now be considerably larger than even the highest estimates,” said Eric Green, an economist with TD Securities, in an email. “The Fed is now backing off the mid-2014 time frame for ending all purchases. Again, the size of QE is now growing larger and the timing of the first rate hike necessarily pushed deeper into 2015.”
The U.S. dollar is weakening in response to Bernanke’s statements at this meeting, while equities are soaring. The Dow Jones Industrials and S&P 500 closed at record highs Wednesday.
However, only 42 percent of U.S. residents trust the man making these decisions to do the right thing for the U.S. economy, according to Gallup poll data from earlier this year.
During Bernanke’s eight years as chairman of the Fed, partisan support for him has been quite volatile. At the start of his term, Republicans loved him, and as his time comes to a close -- he is due to step down in January 2014 -- it’s Democrats who favor him the most.
Here are a few more insights into what the American public thinks of Federal Reserve Chairman Ben Bernanke