M&G’s Leaviss: More US QE needed, not less

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M&G head of retail fixed interest Jim Leaviss says the US needs more quantitative easing, not less.

Leaviss, who manages a number of M&G funds including the £882m M&G Gilt & Fixed Interest Income fund, says he is “nervous” off the back of Federal Reserve chairman Ben Bernanke’s speech regarding a possible tapering of QE.

The manager says: “I am a little bit nervous to bet on the back of QE because we might actually get another wave of QE when everyone realises the US economy is not growing as fast as it should be.”

Last month, Bernanke suggested the central bank could look at slowing its $85bn-a-month bond-buying package “in the next few meetings” if conditions continue to improve. The Fed is currently holding its monetary policy meeting, with some commentators expecting it to start signaling stimulus cuts.

However, Leaviss says: “We need to be a bit nervous and the Federal Reserve, in my view, will probably be thinking about doing more stimulus rather than taking away the ‘punchbowl’.

“However, we have seen a bit of rebound in the US treasury market and perhaps some reduced expectations that the Fed is about to remove the punchbowl.”