Tags: Fed | Dudley | Easing | Euro

Fed’s Dudley: Easing Was a Success and Euro Will Survive

Friday, 18 Nov 2011 08:41 AM

The Federal Reserve's expansionary quantitative easing policies worked, and the euro will survive the debt crisis in Europe, says Federal Reserve Bank of New York President William Dudley.

The Fed has rolled out two quantitative easing programs — asset purchases from banks aimed to fuel investing and hiring — and despite criticism such policies pushed up inflationary pressures without denting unemployment rates, doing nothing would have left the economy in far worse shape. Dudley tells the PBS Nightly Business Report.

"We've done some very careful work on large scale asset purchases that we've done. And we think that they have actually been effective in reducing long-term interest rates by taking duration out of the market," Dudley says.

"By basically helping support the stock market and housing values, and yes, the economy, we wish the economy were stronger than it's been. But we're pretty convinced that the economy would have been significantly worse if we hadn't engaged in these programs."

dudleyfed200.jpg
William Dudley
(NY Fed Reserve photo)
Turning to Europe, where fears that one or more countries will default and damage the global financial system,

Dudley says U.S. exposure is not that worrying and adds policymakers will save the currency.

"What I can say is that U.S. banks, their direct exposures are quite modest. And they're much better equipped to manage any type of crisis today than they were in 2008," he says.

"I absolutely think the euro survives."

Some, however, aren't so optimistic.

"Unless the euro zone debt crisis is resolved in a timely and orderly manner, the broad credit outlook for the U.S. banking industry could worsen," New York-based rating agency Fitch says in a statement.

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The Federal Reserve's expansionary quantitative easing policies worked, and the euro will survive the debt crisis in Europe, says Federal Reserve Bank of New York President William Dudley. The Fed has rolled out two quantitative easing programs asset purchases from banks...
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Friday, 18 Nov 2011 08:41 AM
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