NEW YORK, Fri Aug 17, 2012 – Chances that the Federal Reserve will launch a third round of money printing have risen slightly over the past month to 60 percent, according to a Reuters poll that also showed economists lowering economic growth expectations for this year and next.
Most forecasters have turned more pessimistic on the economy, despite recent, modestly better news on retail sales, payrolls and the battered housing market. The trimmed quarterly growth forecasts for a third straight month.
The latest findings are based on a survey of 17 of the Wall Street primary dealers who deal directly with the Fed, as well as an additional 44 economists in the monthly Reuters Poll.
It was the first time this wide sample of economists put the probability of more quantitative easing, or QE3, at greater than 50 percent, with one economist saying there was a 95 percent chance the Fed will act.
The latest consensus was for $500 billion in additional government bond purchases, on top of the $2.3 trillion the Fed has already bought. The highest forecast was for $750 billion.
The majority of economists polled thought the Fed’s next policy meeting in September was the most likely time for any announcement on QE3.