The Federal Reserve chairman is driving markets with ‘open mouth’ operations, which are just as effective as ‘open market’ operations, former Fed governor Randall Kroszner told CNBC.
Comments from Fed chief Ben Bernanke have sparked wild swings in financial markets over the past two months, with investors scrutinizing Bernanke’s words closely to work out the possible timing of an unwinding of the central bank’s $85 billion-a-month asset-purchase program.
“The open mouth operations are just as effective as the open market operations,” said Kroszner, referring to central bank buying or selling of government bonds.
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