As I wrote yesterday before Narayana Kocherlakota‘s remarks this morning, we are closer to QE4 than a rate hike.
Kocherlakota, president of the Federal Reserve Bank of Minneapolis, said Tuesday that the Fed should wait until the second half of 2016 before looking to hike rates.
Well that is quite a move off of the current stance of the Fed, one year later than what Fed chair Janet Yellen has been speaking of.
Kocherlakota went on to say that the Fed could initiate asset purchases (treasuries, mortgages) should a faltering US economy require it. The fact that the Minneapolis president has said so should move markets today with equities suffering over a strengthening dollar.
There no getting around that the Fed being in the market for a good portion of the last seven years has led to problems in capital markets by pushing aside through regulation (Dodd/Frank) or sheer muscle of buying paper other buyers.