Fed announcing quantitative easing would be wound down by March 2022
It was not until the end of November 2021 that Fed Chair Jerome Powell – finally and belatedly – declared it was time to “retire” the word “transitory.”
But then came the second stage of the Fed’s multifaceted blunder. The policy adjustments that followed Powell’s statement were extremely modest, with the Fed announcing only that its large-scale asset-purchase program, known as quantitative easing (QE), would be wound down entirely by March 2022.
To paraphrase the old Irish joke, you can’t get to a first-best policy starting from here.
Mohamed A. El-Erian 28 February 2022
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