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Jun 22, 2011, 11.28 AM IST | Source: CNBC-TV18

QE3 an unlikely prospect, says Ken Goldstein

Global market is wondering whether there will there be a QE3 or will there be even QE2.5. Ken Goldstein, Economist at Labor Economics Programme with the Conference Board, told CNBC-TV18 that the world market is unlikely to see another quantitative easing.

Ken Goldstein, Economist , Labor Economics Programme

Global market is wondering whether there will there be a QE3 or will there be even QE2.5. Ken Goldstein, Economist at Labor Economics Programme with the Conference Board, told CNBC-TV18 that the world market is unlikely to see another quantitative easing.

ďI donít think that QE2 accomplished that much and there is no political will to allow the Federal Reserve to go ahead with another version of this. I just donít see that happening,Ē he said.

Below is a verbatim transcript of his interview with CNBC-TV18ís Menaka Doshi. Also watch the accompanying video.

Q: Your assessment of the US economy was the first half slowdown due to transitory factors as most economists are saying and do you expect that the second half will be stronger?

A: I donít know whether the second half of 2011 is going to be much stronger than most of the first half has been. We have hit a soft patch or choppy water or whatever term you want to use but I agree that this is transitory. I donít expect that the economy in July and August and September is going to resemble what we have seen here in June.

Q: Is there likely to be another QE3 or QE2.5 or any other version of quantitative easing there?

A: I just do not think that we are going to see a QE3 or QE2.5. One, I donít think that QE2 accomplished that much and second, there is not just simply the political will to allow the Federal Reserve to go ahead with another version of this. I just donít see that happening.

Q: Even if there is no further round of quantitative easing, what seems to be quite clear is the Fed is not talking or is not expected at least tomorrow to be talking the exit language as yet. So the inflated balance sheet or that large balance sheet size says there could be some rollover of some of that debt. What impact is that going to have on treasuries, on the dollar, on commodities after June 30 as QE2 comes to an end?

A: Counter that term inflated by because I think QE2 hasnít been that big a deal. I expect it to die more with a whimper than with the bang. We will come to the end of QE2 and largely we mark about how little happened when it ended and thatís also an argument about why there may not be persuasive argument to do a QE3.

There are some arguments as to from an economic point of view, why we could do with another stimulus on the fiscal side. But on the monetary side, there is very little argument to try this again. It didnít do that much, it will die with a whimper, and by mid July will be asking whatever happened QE2.

Did you miss? Fed to hold phone on QE3; will delay exit: IIF

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