Fed needs to give QE2 time before making adjustments

After announcing it would purchase an additional $600bn of Treasury securities at the last FOMC meeting in early November, it is very unlikely that the Fed will change course at next Tuesday's meeting. We suspect that officials will have been disappointed by the muted market reaction in the wake of that announcement, but it is far too early to declare QE2 a failure when the Fed has barely started to buy those Treasuries.