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Jefferies chief financial economist Ward McCarthy gives his outlook for the Fed and more stimulus.
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Hi thanks very much alarm.
-- fed governors are gathering in Jackson Hole Wyoming for their annual meeting in the Fed has yet to indicate when we'll start pumping more money into the economy.
If it's gonna do that but would GOP presidential -- Mitt Romney making it clear that he would return Ben Bernanke for another term.
How much does politics play into Bernanke's decision now ward McCarthy is the chief financial economy.
Jefferies and -- if -- Bernanke right now thanks for joining us at do you care whether you look political.
As you love figure out what -- wanna start another -- The stimulus.
Well I think whichever word prefer not should be in item in the campaign going after the election on November 6.
But no matter what he does that somebody somewhere who's going to look at it in a political life.
And history.
Suggesting and I think this would hold true for chairman Bernanke it is that he wants the Fed to do what is in the best interest of the country.
And if that means.
That based take some more political heat you know that's just part of the job.
He'll do what needs to be done do you think that they will act by September -- -- actually act on Friday and a bump it up.
Well on Friday I think what -- I don't have great expectations for Friday I think what.
Well happen in his speech is that Fed Chairman Bernanke will tell us what we learned from the minutes and that is that seriously considering.
Providing more stimulus they almost pushed out the timeframe for keeping rates slow.
At the FOMC meeting a few weeks ago I think they'll do that in September.
The big question is when did they do the next QE and the -- suggested that.
There was some.
Reason to think that many of them would like to do we QE but -- also seem to be some disagreement in terms of the structure.
In particular are hard to do it in more flexible fashion right well the Fed will do -- but the -- not quite so clear yet.
Officials have so far lately with a video -- twists thing whether or not creating new money they're just moving money from short term bonds and over in the long term -- to try to keep long term rates -- You think -- actual go so far to start creating new additional money and actual QE3 not just that twist.
I mean you're thinking -- five billion extra per month just to kind of dip the toe in the water.
Well right now as you pointed out the Fed already has a balance sheet policy in place -- Operation Twist that is set to run its course in December.
So -- my way of thinking that's the logical time for the Fed to consider another balance sheet policy.
So it's a much more complicated issue in order to do -- QE before December they would have to decide.
And that they don't want to finish Operation Twist.
Now one thing they couldn't do what should be simple.
Would be to simply curtail this should be sales at the front end.
And continue to buy securities at the one -- that'd be a very easy way to can to take Operation Twist.
And turn it into.
An outright QE Operation Twist began a law had to help so far all right thanks so much for being with us -- MacArthur --
