The Fed will resume its quantitative easing to bolster the economy because it wants to maintain credibility, said Vincent Reinhart, a former monetary affairs director at the U.S. central bank.
“If the unemployment rate does stay up in the neighborhood of 9.5 percent, ultimately Fed officials are going to say they’ve got a reputational risk, that if they’re not seen as acting in a time of severe macro distress their reputation will be impaired,” Reinhart said in a radio interview today on “Bloomberg Surveillance” with Tom Keene. “Ultimately, QE2 will leave the dock.” – Bloomberg
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