BERLIN — Federal Reserve chairman Ben Bernanke said Friday that the effect from the Fed’s second round of quantitative easing will be meaningful but moderate.

“You might argue that it moves asset prices, but that it is not going to move activity,” Bernanke said at a panel discussion in Frankfurt, Germany, organized by the European Central Bank. “We don’t know yet how much movement there’ll be in activity. We think it will be meaningful.”

Bernanke repeated his defense of QE2, while taking issue with the name bestowed upon it.

“Quantitative ease [refers] to policies that seek to have effects by changing the quantity of bank reserves,” he said. “In contrast, securities purchases work by affecting the yields on the acquired securities and, via substitution effects in investors’ portfolios, on a wider range of assets.”

— Market News International

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