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Bernanke's macro conundrum

If the Fed were to suddenly announce a big new program of asset purchases, it could cause inflation expectations to jump. That could raise nominal interest rates and lead to a rise in the price of oil as investors use commodities to hedge against inflation. In such a worst-case situation, the recession could become even worse.

Fed in Hot Seat Again on Economic Stimulus
Published: July 20, 2010
The Federal Reserve's chairman, Ben S. Bernanke, may be willing to pursue additional stimulus measures, but not quite yet.


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