U.S. economic growth hitting exactly the consensus number will clear the way for easing by the Federal Reserve next week.
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Federal Reserve Bank Chairman Ben Bernanke
The muted reaction to the GDP numbers, however, seems to demonstrate that the market has fully priced in quantitative easing.
Think about how extraordinary it is that confirmation of likely easing by Fed hasn’t boosted stocks. The market just shrugged it off.
This implies that the actual announcement next week will likely be a sell-on-the-news event, unless the Fed produces a much-bigger than expected asset buying program.
