Kocherlakota Says Purchases May Have ‘Muted’ Impact

Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said the Fed may have a tough time aiding the economy and reducing a “deeply troubling” unemployment rate through a second round of Treasury purchases.

With financial markets functioning better now than in early 2009, “my own guess is that further uses of QE would have a more muted effect” on narrowing the gap between longer and shorter-term Treasury yields, Kocherlakota said today in a speech in London hosted by the European Economics and Financial Centre, using “quantitative easing” to refer to such purchases.