Meanwhile, the BoE MPC has made a decisive move towards further QE, as the minutes stated that most members felt an economic stimulus was or would be needed in order for the BoE to meet its inflation target.
Alistair Cotton, senior analyst at foreign exchange firm Currencies Direct, said: “It seems the question is which central bank will print first? The markets were desperate for another round of monetary easing by the Federal Reserve at today’s meeting and were hoping Mr Bernanke would act decisively. By only continuing operation twist and not announcing outright asset purchases, the Fed has left the market slightly disappointed. The US Dollar is strengthening across the board and equity markets are falling as risk is taken off the table.
“It now looks like the Bank of England will be the first central bank to start full blown QE after today’s minutes showed a narrow vote, 5-4, in favour of keeping the scheme on hold. It is very likely that further asset purchases will be approved next month and will be implemented alongside the credit easing measures announced by the Chancellor last week.”
It remains to be seen whether or not the Fed embarks upon further QE before the end of the year. Analysts are predicting that if job creation continues to stagnate the Fed will look to QE to lower interest rates and spur investment.
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