- CNBC -
Goldman Sachs on Wednesday reviewed its position on further monetary stimulus, saying that further quantitative easing had a greater than ever chance of being implemented in the United States.
"We now see a greater chance that the FOMC (Federal Open Market Committee) will resume quantitative easing later this year or in early 2012.
We've changed our call because the committee's reaction to incoming economic data is more dovish than previously thought," Jan Hatzius, chief U.S. economist Goldman Sachs said in a note.
Fed officials met on Tuesday and said they still expected a gradual decline in the unemployment rate but conceded that they may keep the funds rate unchanged, implying they would employ additional policy tools in case of further economic deterioration.
"The policy commitment to keep the funds rate at 'exceptionally low levels…at least through mid-2013' was more aggressive than we had anticipated. We are surprised that there is a date, even more that it is almost two years in the future," he said.
He added that the Fed had been explicit, more so than anticipated, about preparing to use "these tools" - the same language used in September 2010 which paved the way for the last round of quantitative easing (QE).
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