St. Louis Fed’s Bullard: QE2 may have averted a liquidity trap

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James Bullard, the president of the St. Louis Federal Reserve, on Saturday said the central bank's decision to begin a new round of quantitative easing in November helped prevent the United States from falling into a liquidity trap.

At an event on asset prices, credit and macroeconomic policies in Marseilles, France, Bullard said the conventional policy response to a negative shock was to promise a longer "extended period" of low interest rates. "This may work – but it may also encourage a liqui

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