tsai3904
01-08-2011, 03:50 PM
http://www.reuters.com/article/idUSTRE7072A120110108
DENVER | Sat Jan 8, 2011 4:33pm EST
DENVER (Reuters) - Federal Reserve Vice Chair Janet Yellen on Saturday defended the central bank's asset buying, citing an internal study showing the economy will gain 3 million jobs as a result of all of the Fed's purchases.
"It will not be a panacea, but I believe it will be effective in fostering maximum employment and price stability," Yellen said in remarks prepared for delivery to the American Economics Conference.
Yellen said a simulation approximating the Fed's most recent asset-buying program was shown to generate about 700,000 new jobs.
The study goes on to suggest that inflation is currently a percentage point higher than would have been the case, implying that if the Fed had not bought longer-term securities after cutting interest rates to near zero in December 2008, the economy would now be close to a damaging deflationary spiral.
Yellen said longer term interest rates are currently lower than they would otherwise have been. Concerns about the Fed's controversial $600 billion bond-buying program -- that it will cause inflation, imbalances, and trigger a damaging competitive currency devaluation -- are misplaced, she said.
DENVER | Sat Jan 8, 2011 4:33pm EST
DENVER (Reuters) - Federal Reserve Vice Chair Janet Yellen on Saturday defended the central bank's asset buying, citing an internal study showing the economy will gain 3 million jobs as a result of all of the Fed's purchases.
"It will not be a panacea, but I believe it will be effective in fostering maximum employment and price stability," Yellen said in remarks prepared for delivery to the American Economics Conference.
Yellen said a simulation approximating the Fed's most recent asset-buying program was shown to generate about 700,000 new jobs.
The study goes on to suggest that inflation is currently a percentage point higher than would have been the case, implying that if the Fed had not bought longer-term securities after cutting interest rates to near zero in December 2008, the economy would now be close to a damaging deflationary spiral.
Yellen said longer term interest rates are currently lower than they would otherwise have been. Concerns about the Fed's controversial $600 billion bond-buying program -- that it will cause inflation, imbalances, and trigger a damaging competitive currency devaluation -- are misplaced, she said.