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Tuesday, February 03, 2009

Quantitative Tightening?

Susan Woodward and Robert Hall are wondering why "the Fed has engaged in quantitative tightening over the past month." As they note, there has been "no explanation for the Fed’s announcements of moving in an expansionary direction while actually contracting":

Any ideas?

Update: An email from Tim Duy says:
Woodward and Hall are confused because they do not recognize that the Fed has not initiated a policy of quantitative easing…because the Fed sees their actions as credit market related, they would have no problem with the balance sheet contracting if credit market conditions dictate. They could easily jump to quantitative easing, but just are not there yet…and I am not saying we won’t get there.

Also, see the remarks in comments.

    Posted by on Tuesday, February 3, 2009 at 09:00 PM in Economics, Monetary Policy | Permalink  TrackBack (0)  Comments (11)

          

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