Monetary and fiscal policy should hit midyear

The combination of nearly $150 billion in fiscal stimulus, plus aggressive monetary policy easing could begin to support the economy midyear, some economists say.

“Fed easing typically affects the economy nine months after it occurs,” Rogers says.

The U.S. Fed started the current easing cycle in September 2007 with a 50- bp reduction in the fed funds rate (to 4.75 percent). Additional 25-bp cuts followed in October and December 2007.

“[A rebound] could occur midyear,” Rogers says. “The housing sector lifts, we have $150 billion floating in, and the Fed easing hits.”