The Federal Open Market Committees (FOMC) two-day meeting begins today. It will decide if it should extend Operation Twist, wherein the Fed sells short-term treasuries, and buys longer-term bonds or if it should partake in stimulus measures to boost a flagging US economy.
Geoff Lewis of JPMorgan Asset Management highly doubts that the Fed will go for a third round of quantitative easing (QE) as he believes the US economy is enjoying a slow recovery. We think GDP growth will pick-up a bit in the second half of the year to 2.5%, he says.
He doesnt think that an announcement by the Federal Reserve that they are going to implement further QE will be enough to generate a sustainable equity rally.
Below is an edited transcript of his interview. Watch the accompanying video for more.
Q: What are your expectations from the FOMC meeting? A lot of people are talking about an extension of Operation Twist. If that comes through, is it sufficient for what the market is pricing in or is