From Seekingalpha · Victor Dergunov · · 50s
Why Fed Should Restart QE
Fed may need to restart QE to stabilize markets as inflation and debt rise.
In brief
Fed may need to restart QE to stabilize markets as inflation and debt rise. The Fed should consider restarting quantitative easing to stabilize credit markets amid high inflation and debt. Originally reported by Seekingalpha.
Fed's Current Stance
The Fed's hawkish stance, driven by high inflation and AI investment, is straining markets amid soaring debt and deficits.
Fed Should Pivot to Easing
I argue the U.S. economy now requires persistently low rates; the Fed should pivot to easing and consider longer-end QE to stabilize credit markets.
Fed Balance Sheet Expanding
Despite hawkish rhetoric, the Fed's balance sheet is quietly expanding, potentially injecting about $200 billion in liquidity this year.
S&P 500 Target
I maintain a constructive outlook, reiterating my early 2027 S&P 500 target of 8,200, 8,500, contingent on a dovish Fed pivot and easing geopolitical risks.
The essence
The Fed should consider restarting quantitative easing to stabilize credit markets amid high inflation and debt.
