Speed up structural changes

US Fed's fourth round of quantitative easing will add further pressure to China's export-oriented enterprises

The Federal Open Market Committee, a monetary decision-making body within the US Federal Reserve Board, announced on Wednesday, after a two-day meeting, that the benchmark interest rate of 0 to 0.25 percent will remain unchanged if unemployment in the United States stays above 6.5 percent.

It also launched a new, open-ended $45 billion a month purchase of Treasury bonds to replace the expiring "Operation Twist". Together with the $40 billion mortgage-backed securities purchase-quota laid out in QE3, that will bring its total quantitative easing asset purchases to $85 billion a month.

The latest round of quantitative easing, QE4, came just three months after QE3 was lunched. This demonstrates the US economy has failed to recover as expected and the Obama administration has no better options to deal with the struggling economy and high unemployment rate.

The Obama administration faces a range of problems involving "fiscal cliff" negotiations in the coming year as "Operation Twist" comes to an end. The latest data show that unemployment in the US is still high and there are no signs of a substantial economic recovery. Due to the Republicans' fierce opposition to raising taxes on the wealthy, the Obama administration has lowered its tax revenue demand by $200 billion as a compromise. Under these circumstances, QE4 is viewed as a stimulus that can help maintain the previous momentum of liquidity injection.

The Fed chose to inject liquidity into the market with QE1, adopted in September 2008, and lowered short-term interest rates in QE2, which began in November 2010, both of which were tantamount to increasing dollar issuance. However, QE3, which was launched in September, and the newly announced QE4, purchased assets as a way to bring down long-term interest rates and bolster the reeling mortgage-lending market.