In the end, the president of the Federal Reserve, who was appointed by a Republican government and chosen for a second mandate by a Democrat cabinet, decided to enter the election process. Ben Bernanke has made his move to support the re-election of Barak Obama with a fresh round of monetary expansion.
He has ignored those who proposed it should have been done after the results of the elections, after closely monitoring the consequences of the European Central Bank buying sovereign debt, and after getting the figure of the unavoidable fiscal adjustment. The injection of money from this Quantitative Easing 3 was, in fact, expected to occur in December.
The discussion, until now, was about whether further QE would better the perspectives of the real economy or would artificially inflate the depressed stock markets. But Bernanke didn’t want to wait until next year. His latest QE delivery will reactivate the US economy and Obama sits at the front row to take advantage of it.
The intensity of the measures accorded by the Federal Open Market Committee, intervening in the primary and secondary markets without deadline, reveals both Bernanke’s intentions but the Fed’s worries that the economic scenario looks troublesome.
The Fed will buy $85 billion in assets every month, focusing on mortgage-backed securities, and maintain interest rates at between zero percent and 0.25 percent until mid 2015.
Even though the ECB announcement seemed to calm investors down, the balance is unstable enough for risks to keep imposing tensions over the global capital markets.