Bank of America: will the Fed prolong QE?
The Bank of America attempts to quantify how far stocks would have to slide to cause the Fed to either extend or restart a bond-buying program that’s currently on track to end this month.
The bank points out that in 2010 and 2011 the Fed acted after 11% and 16% corrections down in stocks. As a result, the specialists conclude that it “it may take a further 10% decline from the recent lows” for markets to begin anticipating that the Fed will restart its bond buying to calm markets and help prevent the lost wealth from causing broader economic problems.”
According to the Bank of America, current problem of the stock market may be partly explained by the weak ECB’s response to Europe’s very inflation and weakening growth.