Neel Kashkari: QE3 Coming, Rates to Stay Low Through 2014

PIMCO's Neil Kashkari believes that the Fed will stay low on rates until the end of 2014. Further more, he expects there to be a QE3. "Remember, markets are swinging. Consumer sentiment is swinging, people can't see any clouds in the horizon. A few months ago, the world seemed like it was going to end." notes Kashkari. "We think it is more in the middle. That is, we are going to muddle through, continued but very slow growth." "Our view into 2012 is around 2 percent real GPD growth, which is good, but not what we have been used to pre-crissis. We think the Fed is going to be active," says Kashkari. On what brings the Fed back in, he thinks it is going to be continued low growth, risk coming back down, equities and other asset prices coming back down. "Every time the Fed takes the foot off the gas, or hints at it, risk prices start to fall again. The Fed is going to need to be active. If treasury yields happen to move back up, that could also force Fed's hand as it bleeds into the mortgage market."