What will happen when qe2 ends

Rather than focusing on QE2's end, investors have bigger fish to fry, as they sort through a mixed bag of other economic news. Big businesses are still keeping cash on the sidelines, as fear about the economy runs high. Europe's debt crisis is flaring up again and Congress continues to dawdle on raising the debt ceiling , neither of which spark much confidence going forward. That said, with the Fed staying in neutral for a while, investors and businesses will finally be able get a purer picture of how the U.

But that is valuable and could clear up uncertainty, said Joseph LaVorgna, chief U. I think it will. Eyes on the Fed. Abc Large. The QE2 plan included purchase of treasury bonds of around USD 75 billion per month for the last eight months to increase money supply in the system. The QE2 term is coming to an end this month. Analysts are analysing the various economic factors after the QE2 term in the US. Initial expectations from QE2 The main objective of the Fed while launching QE2 was to stimulate economic activity by cutting down interest yields on bonds, and thereby forcing investors to invest in riskier assets such as equity.

The idea was that this would in turn create a wealth effect and result in more consumer-spending, which would inflate the economy. Also, the continued low interest rates would help in servicing interest payments of the federal deficit.

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World Show more World. US Show more US. Companies Show more Companies. Markets Show more Markets. Opinion Show more Opinion. Growth slowed sharply in the first quarter and data has yet to signal a quick recovery. The jobless rate remains above 9 percent.

How the Fed would do that depends largely on whether one thinks QE2 and all its side effects were worth the trouble. The policy was launched late last year to keep a U. The risks at the time were real. Recovery had stalled, prices were falling, the jobless rate was rising and stocks had gone into a multi-month swoon. They should be shouting this from the rooftops. It weakened the dollar, which makes U. But that has stoked inflation abroad and, some say, threatens to raise U.