SLI's Batty: Third instalment of QE in US could hit $1trn next year

The Federal Reserve may pump as much as $1trillion into the US economy in a third wave of quantitative easing, said Standard Life Investments' global investment strategist Richard Batty.

The asset allocation specialist said “significant monetary loosening” is still needed in the US, which unveiled a $600bn asset purchase programme, dubbed QE2, earlier this month. “If growth is anaemic and inflation is too low, the central bank would have to initiate some form of tax cuts, or a voucher scheme so consumers would have to spend, to pump money into the economy. The US may need to implement unconventional policy measures,” he said. “Why wouldn’t we see the purchase of $1trn or more treasuries by the summer? Household debt levels remain high – leverage is a big problem becau...