FT: US QE2 still on

...That does not mean QE2 is failing as long as rates are lower than they would be in its absence – and the Fed is confident that they are. The Fed always expected that, if QE2 were a success, then longer-term rates would rise rather than fall as investors anticipated an economic recovery...

What does make the Fed unhappy is any market belief that political attacks on QE2, mainly from Republicans in Congress, will reduce the amount of assets that it buys. Some officials think that a part of the rise in yields is due to this and that it is unjustified. The Fed endured worse attacks, they point out, when former chairman Paul Volcker raised rates to choke off inflation in the 1980s. It was not swayed...

Unless there is a big shift in the economic outlook, spring is the most likely time to change the $600bn number, or at least to clarify what comes next. The Fed will not keep markets guessing right up until the end of June, when the current round of purchases is due to finish.