There are signs that he latest round of quantitative easing from the U.S. Federal Reserve Board is starting to work, says BCA Research

In a research note, BCA explains that it examines money growth metrics, and corporate sector borrowing for evidence of whether Fed policies are effective. The independent research firm says that, “Various measures of currency and money growth have clearly bottomed (albeit at a very low level) and are turning up.” BCA also says that the money multiplier is edging higher.

“All of this suggests that banks and corporations are beginning to lend and borrow again, a key missing ingredient so far in the recovery,” BCA says. “The implication is that the economic recovery should remain on rack.”

That said, BCA doesn’t anticipate a sharp bounceback for the U.S. economy.

“Of course, we still expect real GDP growth to fall short of previous recoveries and the employment and consumer spending revival to be gradual,” BCA concludes. “Nevertheless, modest gains in the equity market are likely, should the rise in money growth, and thus confidence in the recovery, continue.”

IE