"Operation Twist" will have a modest impact on the economy, according to Federal Reserve Bank of Atlanta president Dennis Lockhart.

"The transmission mechanism for monetary policy remains somewhat impaired, and for this reason I am not expecting large gains from the Fed's most recent action," Lockhart told a conference in Jacksonville, Fla., according to prepared remarks released by the Fed. "I think it's realistic to expect modest positive impact from this program."

He said the maturity extensions and mortgage-backed repurchases are "a measured, incremental attempt to add more support to the recovery. It's not a fix for everything that ails the economy, but it should help."

The Federal Open Market Committee's decision "should be taken neither as signaling further action on the part of the Fed nor conveying that 'we're done,' " Lockhart said, adding that future policy will be dictated by economic circumstances.

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