Before today I had been worried that the Fed would (again) undershoot its 2% inflation target. After the Fed’s announcement of unlimited QE today, those worries are gone:
The Federal Reserve on Monday announced aggressive new emergency measures to support the economy and ensure that credit flows to households and businesses as the country faces the prospect of a deep downturn from the coronavirus pandemic.
The central bank is committing to buying as many U.S. government bonds and mortgage-backed securities as needed “to support smooth market functioning.”
Meanwhile, inflation expectations in the Euro area have collapsed. I wish the ECB would announce to do “whatever it takes” to bring those inflation expectations back on track. But I’m doubtful.