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Fed Boston Summit

First interview with Boston Fed President Eric Rosengren. 

His main message I took away is, “with nominal interest rate fixed (near zero level), disinflation would be monetary tightening. Deflation would be even worse”. This offers enough reason for further monetary easing.

Also, one lesson learned from Japan was that monetary policy under “liquidity trap” should be proactive. The Fed’s monetary easing can’t afford to be nearly as gradual as Japan.

Second interview with John Taylor. According to Taylor Rule, current interest rate should be at .75%. He is not in favor of QE2.

The last interview with Jim Hamilton on how the Fed might affect long term interest rate through bond purchase.

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