QE4 — Inevitable and Near Future?

Olga V. Koncevich () and Vsevolod Y. Cherkasov ()
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Olga V. Koncevich: Financial Research Institute, Moscow 127006, Russia
Vsevolod Y. Cherkasov: The Central Bank of the Russian Federation, Moscow 107016, Russia

Finansovyj žhurnal — Financial Journal, 2017, issue 1, 114-127

Abstract: Guided by theses of Janet Yellen’s speech on the Symposium on Monetary Policy Prospects which took place in August 2016 in Jackson-Hole (Wyoming) we seek to comment and explain more decisively the current state of play in policy instruments use by the Federal Reserve System (the Fed). At the same time, the much more important circumstance for timely understanding is that duration of a business cycle does not leave the Fed with large time margin to rise the interest rate to a level more appropriate to Taylor rule, and new round of quantitative easing becomes the possible scenario after passing of cyclical peak. “Farewell” to quantitative instruments of liquidity injection in the financial markets apparently becomes a question of even next cycle, and monetary effect of their application can be more extensive and remain longer than it is meant by the previous QE rounds. This outlook is worth the close attention of those economies in Europe and Asia, which currently also lean on quantitative tools as well as of the countries applying traditional toolkit, inter alia within inflation targeting framework.

Keywords: Fed; quantitative easing (QE); balance sheet policy; excess reserves; IOER; reverse repo; Taylor rule; business cycle (search for similar items in EconPapers)
JEL-codes: E32 E43 E47 E52 E65 (search for similar items in EconPapers)
Date: 2017
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