English: The Marriner S. Eccles Federal Reserve Board Building (commonly known as the Eccles Building or Federal Reserve Building) located at 20th Street & Constitution Avenue, NW in the Foggy Bottom neighborhood of Washington, D.C. Designed by architect Paul Philippe Cret in 1935, construction of the Art Deco building was completed in 1937. Its 2009 property value is $109,029,200. (Photo credit: Wikipedia)

This is an excellent, MUST READ article by macro-economist, Gavyn Davies in his FT blog.

via Never underestimate the Fed’s dovishness | Gavyn Davies – FT.

This morning, newspapers around the World are full of stories of financial markets rising yesterday on the back of the unexpected news from the Fed.

Personally, I still think there there is room for significant fiscal expansion in Washington, London and Berlin. By selectively cutting taxes, there is an opportunity to stimulate growth and investment, reducing unemployment.

Let me turn this to an open question:

How should central banks effectively disengage from QE?

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