It is a very close call as to whether the Fed will launch a third round of large-scale asset purchases in the second half of this year. We expect growth to continue slightly below the economy's potential rate. At best, the unemployment rate will edge slightly lower. Under those circumstances, the Fed might decide that it doesn't need to ease further when monetary policy is already so accommodative. But there is no denying that the incoming data over the past month or two suggests that our forecast for the second half of the year might now be too optimistic. Even before that there were, and still are, big downside risks to our forecast. The euro-zone crisis could worsen at any moment and the uncertainty surrounding whether Congress will resolve the so-called fiscal cliff could hit domestic investment and spending plans well before the start of next year.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services