In his Money Watch column, Mark Thoma looks at the below graph and sees signs that the Fed will pursue further quantitative easing measures:

Thoma writes:

The Fed is very sensitive to and very fearful of deflation, and the fall in inflation expectations evident in the graph was one of the reasons the Fed decided to implement QE1. And as you can see from the graph, this (along with the other steps the Fed took at that time) turned the expectations around, at least for awhile. However, just before the dotted vertical line on the graph, expectations began falling again. What is the vertical line? It shows the point in time when QE2 was announced by Ben Bernanke (August 27 of 2010 at Jackson Hole, Wyoming), and once again inflation expectations turned around.

However, notice that recently the trend has turned downward again and if this continues the Fed is likely to intervene once again.

What do you see in the graph?

Do monetary policy measures need to be taken?  What are the lessons from QE1 and QE2?

Read The Fed Is Laying the Groundwork for Further Easing here.