Fed to Continue $85 Billion Stimulus

Jacob Harper |

In a very surprising move, the Federal Reserve announced on Sept. 18 that it would continue quantitative easing at present levels of $85 billion a month. The announcement discredits widespread assumptions that an immediate “tapering” of the stimulus was an almost certainty.

In a 9-1 vote, the Fed decided to keep the $85 billion a month bond-buying program unchanged, and said they were waiting for “more evidence that progress will be sustained” before they would consider curbing government stimulus.

This round of quantitative easing stimulus, known as QE3, began in Sept. 2012. QE3 is open-ended, causing some analysts to dub it “QE-Infinity.” With yet another round of continuance of the program, that moniker is looking less and less like a joke. 

The market has for some time been preparing for a “taper” of the stimulus. Analysts had surmised the impact of the taper had even been accounted for in various markets, notably gold, which has been declining in preparation for the taper all summer.

Few analysts predicted that the taper would not happen at all, and in the immediate aftermath of the surprise announcement from the Fed, markets across the board rebounded.

Following the Fed's announcement, gold gained nearly $40 dollars almost instantaneously. The S&P 500 as well immediately shot up, gaining nearly a percent in one hour and hitting an all-time high of 1,720.57 ahead of the closing bell.

Despite the market rally, the hidden message in the continuance of QE3 is Fed pessimism on the presumed American economic turnaround. In fact, the Fed cut its forecasts for growth in 2013, from 2.3 to 2.8 percent to 2 to 2.3 percent.


(photo of Ben Bernanke courtesy of Flickr)

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


Symbol Name Price Change % Volume
BVBC Blue Valley Ban Corp 8.76 0.00 0.00 0


Emerging Growth

Propanc Health Group Corp

Propanc Health Group Corp is an early stage healthcare company. It is engaged in developing new cancer treatments for patients, suffering from pancreatic and colorectal cancer.

Private Markets


Pinterest is a visual discovery and planning tool. Users ("Pinners") use the site and apps to get ideas for their future, such as recipes, places to travel, and products to…


Wealthfront is an automated investment service that serves as an alternative to traditional financial advisory services. The company manages a diversified, continually rebalanced portfolio of index funds on their clients’…