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Thanks Nicole Nicole mentioned then of course of -- -- reserve's policy meeting is underway but this is Central Bank ready to act.
My next guest says split doesn't think will see more stimulus Smart joining me now is -- -- Donna good thanks Moody's senior US economist -- to be exact.
Carl thanks for joining us you're saying QE3 the chances are one in three wife that.
I would say one in three I would say even lower for tomorrow what the -- just not ready to pull the trigger on any major new policy initiative so I think tomorrow it's really a brainstorming session for policymakers is where they consider.
Possibilities that if the economy deteriorates further out what are their options.
And then that then that brings us to the September meeting which is the next meeting after tomorrow how -- they could potentially implement some sort of policy response.
And that's where consensus stands September action but the question right we've had two rounds of kiwi we've had a twist and a lot of people would argue he hasn't done.
Nearly enough has not made a meaningful.
Improvement in the economy so what argument with the Fed provide for enacting a third round of QE.
Well the argument is that something's better than nothing.
I think in the -- that mindset at least stand down I would argue that there was some benefit from Operation Twist and also the -- -- -- prior rounds of the quantitative easing.
But not enough.
If it was sufficient -- would be growing closer to any outside -- -- we've rallied 2%.
Through the stock market rally that that's one not major channel stocks have a very important -- portfolio effect on both the households and businesses.
But -- -- growth through also excuse me through the a weakness in the trade weighted dollar by devaluing the currency.
We effectively stimulated the export sector which made a very significant contribution to growth to this point in the cycle.
Odd that that surge in exports woke up the factory sector in manufacturing.
I created jobs in created -- so that asserted that the jump start for the economy the question now is can that growth be sustained.
It a troubling trade deficit but I don't wanna go down that -- wanna bring in Europe to the discussion.
Geithner in Europe suggesting some kind of coordinated effort with the US in your up the kind of meaning the door open as to what it would be can -- -- -- -- Would it be well I think he's -- money printing coordinated mining printing.
Well printing in the form of up quantitative easing I think get you know.
What -- getting to the point where the Fed -- other central banks are starting to worry about what policy options they really have left and -- they have to start being creative.
So it one way to have a little bit more bang for your buck is -- everyone does whatever they're going to dual all of the same time so this coordinated action.
We'll have been important psychological impact on a global financial market.
After the US only have a couple of seconds Carl we got a lot of key data points today big problem with the slowing GDP is the consumption confidence was up.
-- -- rose spending was flat do you think that we will get people with this pent up demand really ready to spend -- to the balance of the year we just can't.
Depend on spending here at least in the short term.
I think that -- -- -- in the short term but in the back half of the year we should see some improvement in spending it's gonna depend on the labor market.
-- there are some positive signs that maybe this soft patch is starting to fade jobless claims are down consumer confidence as you mentioned has turned the corner.
It durable goods orders last week look decent so there are some very preliminary tentative signs.
That maybe we are finally starting to exit this soft patch all right Carl thanks so much car -- dot I gotta let you go -- -- break.