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Bond Market Rejects Fed’s Unconditional Love: Caroline Baum

How’s that QE2 working out for you?

To answer the question, we first have to establish the goals of a second round of quantitative easing as laid out by Federal Reserve Chairman Ben Bernanke. The Fed’s purchases of U.S. Treasuries “affect the economy primarily by lowering interest rates on securities of longer maturities,” Bernanke explained in a Nov. 19 speech in Frankfurt. Lower rates equate to more “accommodative financial conditions,” he said.