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The facade of the U.S. Federal Reserve building is reflected on wet marble during the early morning hours in Washington, July 31, 2013.
The facade of the U.S. Federal Reserve building is reflected on wet marble during the early morning hours in Washington, July 31, 2013.
(Jonathan Ernst/Reuters)

From here to QE-ternity? Fed whipsawed by data

You had to have your head on a swivel to follow the shifts in the world’s monetary policy tides Thursday.

Just as the European Central Bank stunned markets with a cut to its policy interest rate (an unmistakable nod to the risk of deflation, as my prescient colleague Brian Milner wrote about last week), the big economic indicator of the day substantially raised the odds that the U.S. Federal Reserve is about to go the other way. The third-quarter U.S. gross domestic product release is the latest and most compelling sign that U.S. economic growth is accelerating. The positive data clears considerable debris from the path for the Fed to begin tightening its own policy, an event that financial markets may have prematurely relegated to the back burner.