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Monday, April 04, 2011

Are Large-Scale Asset Purchases Fueling the Rise in Commodity Prices?

In this Economic Letter from the FRBSF, Reuven Glick and Sylvain Leduc argue that the Fed did not cause the run-up in commodity prices:

Prices of commodities including metals, energy, and food have been rising at double-digit rates in recent months. Some critics argue that Federal Reserve purchases of long-term assets are fueling this rise by maintaining an excessively expansionary monetary stance. However, daily data indicate that Federal Reserve announcements of large-scale asset purchases tended to lower commodity prices even as long-term interest rates and the value of the dollar declined.

More here.

    Posted by on Monday, April 4, 2011 at 05:22 PM in Economics, Monetary Policy | Permalink  Comments (17)


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