KEY POINTS
  • A fourth round of quantitative easing will be needed before year's end to address stresses in short-term lending markets, according to Credit Susse analyst Zoltan Pozsar.
  • So-called QE4 would help rebuild bank reserves, which have dropped as the Fed has shrunk its balance sheet, Pozsar said.
  • Market experts continue to dissect the problems in repo markets that flared up in mid-September.

The Federal Reserve could be launching another round of money-printing in the next few weeks as problems in the overnight lending markets reemerge and force the central bank into more aggressive action, according to a Credit Suisse analysis.

A fourth version of quantitative easing — often referred to as "money-printing" for the way the Fed uses digitally created money to buy bonds from big financial institutions — would be needed by year's end to bridge a funding gap as banks scramble for scarce reserves, Zoltan Pozsar, Credit Suisse's managing director for investment strategy and research, said in a note to clients.