September right time to implement Phase III of QE: AXA IM

Eric Chaney of AXA IM, says that it's too early for the Fed to embark on quantitative easing because there is this huge uncertainty which is the fiscal policy next year, but at some point it would become too late. I think September is a good date to implement phase III of quantitative easing and there is a possibility that the announcement could be made, in the Jackson Hole gathering of central bankers. I think the market is taking a more positive view about the Fed.

Below is the edited transcript of his interview to CNBC-TV18.

Q: Do you expect to see more easing from the Fed after the comments from the Congressional testimony as Jackson Hole meeting is coming up in August which has been notorious for these type of announcements. Both QE1 and QE2 were announced in that meeting?

A: It's too early for the Fed to embark on quantitative easing because there is this huge uncertainty which is the fiscal policy next year, but at some point it would become too late. I think September is a good date to implement phase III of quantitative easing and there is a possibility that the announcement could be made, in the Jackson Hole gathering of central bankers.

Q: What is driving the European markets? Is it earnings, some news of possible easing or increased chances of easing from Bank of England?

A: At this stage I don't think that the Bank of England is important for the equity markets. Bank of England has decided to go for another layer of quantitative easing which they can always increase, but we are reaching some limits.

I think the market is taking a more positive view about the Fed. There was some immediate negative reaction because Bernanke did not announce quantitative easing. Now, the markets have realized that what he said about the economy is what we know, that there is some uncertainty but it’s not that bad. The housing market, which is a very important point of his testimony, is sending positive signals and I think the markets are taking all that a bit more positively.