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The Quantitative Easing Program Is Handled With Prudence

The GDP is estimate to have grown this year at a more rapid pace, comparing with 2012. The general economic sentiment about United States is positive. Still, Chairman Ben Bernanke proves prudence and is determined to end the Quantitative Easing program in progressive steps depending on the evolution of the economy. Nevertheless, we cannot expect miracles to happen this year because of the economy that is still damaged by previous decisions as budget sequestration, expiration of the payroll tax cut, declines in defense expenses and increases of taxes. Also, the Committee highlighted the positive and negative effects of the low interest rate, focusing on the negative ones. Their purpose is to provide stability to the financial system and low interest rates on long term may not lead to an optimum system. On the other hand, the actual situation of the economy can’t afford an increase in interest rate and neither a premature tightening of the monetary policy.

Also the Bank of Japan’s press conference reassures investors that the economy of Japan is a stable one. Further measures will be taken but, again, prudence is showed in taking decisions and adjusting the stimulus program. The periodic reports that matter in understanding how the economy is doing, will be carefully watched and considered before taking any decision.

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