San Francisco Fed Research Sees QE Offering at Best Moderate Growth Boost

According to San Francisco Fed research, the Fed’s bond-buying programs have given a moderate boost to the economy, but they would have far less impact without the Fed’s simultaneous promise to keep rates low, they showed.


In this context, the message from researchers is that Federal Reserve should end its massive bond-buying program in the coming months.


More from San Francisco Fed:


The Federal Reserve’s large-scale purchases of long-term Treasury securities most likely provided a moderate boost to economic growth and inflation. Importantly, the effects appear to depend greatly on the Fed’s guidance that short-term interest rates would remain low for an extended period. Indeed, estimates from a macroeconomic model suggest that such interest rate forward guidance probably has greater effects than signals about the amount of assets purchased.


 Figure 1: Estimated effects of large-scale asset purchases

Change in real GDP growth


Figure 2: Estimated effects of temporary federal funds rate cut

Change in real GDP growth