El-Erian guest post: More to encourage the Fed to taper | FT Alphaville:
"Mohamed El-Erian, chief executive and co-chief investment officer at PIMCO, submits this guest post to FT Alphaville.
The bond market reacted to today’s research note from the San Francisco Fed with an immediate bear steepening.
In the August 12th FRBSF Economic Letter, Vasco Curdia and Andrea Ferrero summarize their recent work estimating the stimulative impact of large-scale asset purchases by the Federal Reserve. They find that the impact on growth and inflation is quite limited; and it would have been even smaller if QE were not supported by forward policy guidance. Indeed, “forward guidance is essential for quantitative easing to be effective.”"
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