Alex Tabarrok points out that the Fed’s new promise to keep short-term interest rates at zero for two years will, through arbitrage, lower longer-term bond rates as well. QE2 is, basically, nothing more than lowering interest rates on longer-term Treasury bonds, so the Fed’s communication is more or less another way of performing quantitative easing.
In fact, as Tabarrok mentions, the forecasting firm Macroeconomic Advisers has estimated that the Fed’s communication was equivalent to about $760 billion of quantitative easing along the lines of what the Fed did with QE2. For reference, QE2 was roughly $600 billion in bond purchases.
