Market expectations about the pace of the US Federal Reserve’s quantitative easing (QE) have been erratic given the wide divergence of views in the FOMC and the mixed signals that the economic data has given. What is your assessment of how things stand at the road ahead, especially after the recent FOMC and ECB meetings?
Marc Faber : Well, everybody has different views. However, in my opinion, I think
that the US Federal Reserve has lost control over interest rates. If you
look at the recent asset purchases of $85 billion a month, despite this
asset purchases, the yield on the 10-year Treasury note has been rising
now for more than a year.
From 1.4%, it has now risen to 2.7%. So, we have a huge increase in
interest rate already despite US Fed’s buying of treasury and
mortgage-backed securities. So, I think it is not important to watch
what the Federal Reserve is doing than actually watch what the markets
are doing. Obviously, in the past, such interest rate increases have had
a negative impact on asset markets. - in business standard
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.