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Thursday, June 30, 2011

Bullard: QE2 worked

WASHINGTON (MarketWatch) — The Federal Reserve’s innovative and controversial plan to pursue monetary policy through a second round of asset purchases, known as QE2, “worked in reality” by helping avoid a bout of mild deflation akin to Japan, a regional Fed president said Thursday.

“QE2 has shown that the Fed can conduct an effective monetary stabilization policy even when policy rates are near zero,” said James Bullard, president of the Federal Reserve Bank of St. Louis, on Thursday...

Economists gave mixed reviews to the program. But it’s difficult to disentangle because other shocks hit the economy in the meantime, Bullard said. He said this was a “standard problem” in evaluating monetary policy. [ ---WSJ Marketwatch]

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