Can Fed rev up US economy?

---

While the US economy is rebounding from the worst recession since the 1930s, it is doing so at a snail's pace.
And that is why the US Federal Reserve (Fed) announced Wednesday that it would engage in a second round of a process known as "quantitative easing", or QE2.
The Fed plans to purchase 600 billion U.S. dollars worth of government bonds in a bid to revive the sluggish U.S. economy. The central bank hopes this move will ultimately reduce the high jobless rates that continue to plague the nation after the economy took a nose dive two years ago.
This is the second round of such stimulus measures, after the Fed purchased 1.7 trillion U.S. dollars worth of mortgage-backed securities and treasury notes between December 2008 and March 2010 in a bid to keep the economy from plunging into a second Great Depression.
While the move is unusual and Fed Chairman Ben Bernanke has been criticized for taking unorthodox steps to stimulate the economy since the recession began, some economists say it is warranted.
Critics, however, believe growth is not weak enough to justify more quantitative easing, and argue that it could spark unintended consequences, such as another asset bubble like the one that popped in 2007 and sent the global economy reeling.
Pros and cons
The Fed hopes the QE2 will make it cheaper to borrow, which could in turn help some people refinance their homes and give businesses easier access to lines of credit. It could also push down the dollar, which could boost exports.
Karen Dynan, vice president and co-director of the economic studies program at the Brookings Institution, said this latest QE2 could help bolster the economy, although it is no silver bullet for U.S. economic woes.
The recession ended about a year ago and employment has grown slowly, such that the country has only made up a small fraction of the more than 8 million jobs lost to the recession, she noted in a video interview on the organization's website. — Xinhua