When the Fed first announced that it would begin to taper its QE program in December 2013, there was some concern that this move could cause market volatility and disrupt the economic recovery. Some worried that the reduction in the Fed’s bond purchases could lead to a sudden rise in interest rates, which could hurt both the stock market and the broader economy.
On the other hand, some argued that the Fed’s decision to taper was a sign of confidence in the strength of the recovery and that it could help to prevent future asset bubbles or inflation.
While QE was initially seen as a necessary policy response to the crisis, the continued use of such unconventional tools over an extended period of time raised concerns about the potential risks and unintended consequences of such policies.
For example, some critics argued that the large-scale bond purchases associated with QE could lead to inflation or asset bubbles, while others raised concerns about the impact of such policies on income inequality.
Some of the Fed’s biggest critics against ending QE were:
Politicians. Some politicians, particularly those from the more progressive wing of the Democratic Party, were critical of the Fed’s decision to end QE. They argued that the policy has not done enough to boost economic growth and that ending it too soon could lead to a slowdown in job creation.
Economists. Some economists argued that the Fed’s decision to end QE could lead to deflation, a decline in prices that could harm the economy. They also suggest that the policy has not done enough to boost consumer spending and that ending it too soon could hurt businesses that rely on consumer spending.
Market analysts. Some market analysts have expressed concern that ending QE could lead to a stock market correction, particularly if interest rates rise too quickly. They suggest that the policy has artificially inflated stock prices and that ending it could lead to a market correction.
International organizations. Some international organizations, such as the International Monetary Fund (IMF), warned that ending QE could lead to a slowdown in global economic growth. They suggested that the policy supported global economic recovery and that ending it too soon could harm the global economy.
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