QE2

Definition:

The second program of quantitative easing was first mentioned in a speech given by Federal Reserve Chairman Bernanke in Jackson Hole in August 2010. The Fed officially announced the program on November 3, 2010. The Fed stated that it will purchase $600 billion of longer-term Treasury securities by the end of 2nd quarter of 2011, a pace of about $75 billion per month in order to promote a stronger pace of economic recovery in the United States. The Fed would also use the income from its portfolio of securities for additional purchases bring the total purchases close to $800 billion. The purchases are focused in the 5-10 year maturities.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Underwrite

To guarantee, as to guarantee the issuer of securities a specified price by entering into a purchase and sale agreement. To bring securities to market.

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