Cazenove's McDonald: Why the Fed will not unleash QE3

Robin McDonald, co-head of the multi-manager range at Cazenove, has said investors should not hold out for further stimulus from the Federal Reserve as he believes it has ceased its policy to weaken the US dollar.

Despite suggestions of QE2 from Federal Reserve chair Ben Bernanke earlier this year, the Fed has thus far failed to replicate its earlier quantitative easing programmes, instead opting to expand Operation Twist, which involves trading in shorter-dated bonds for longer-dated debt. McDonald said there are too many potential risks and not enough upside to a full-blown 'QE3', despite lingering hopes from investors. "We are at a tipping point and the balance of risk is skewed against weak dollar policy. In a world where emerging markets growth is slowing, I do not think the Fed will do ou...