QE3

Finally the much-waited QE3 is launched. Refer to highlight below, cheap funds will continue until mid-2015. It is really interesting to see assets price continue to rise in next 3 years.

Fed to launch QE3 by buying mortgage securities

$40 bln of MBS per-month, will do more unless job market strengthen

The Fed announced on Thursday a third round of asset purchases to drive down interest rates and help lower the unemployment rate

By Greg Robb

WASHINGTON (MarketWatch) — The Federal Reserve, worried that improvement in the unemployment rate has stalled, announced a third, large purchase of bonds on Thursday in an effort to bring down long-term interest rates and spur growth. 

The Fed said it would buy mortgage-backed securities at a pace of $40 billion per month.

The Federal Open Market Committee, which ended a two-day meeting on Thursday, said it was concerned that, without the action, “economic growth might not be strong enough to generate sustained improvement in labor market conditions.”Read text of statement.

In addition to bond purchases, the Fed said it intends to keep the benchmark short-term interest rate – the federal funds rate, at nearly zero until mid-2015. The prior guidance on the first rate hike had been late-2014.

The guidance now extends well beyond the term of Fed Chief Ben Bernanke, which ends early in 2014.

The Fed has left the federal funds rate at nearly zero since December 2008.