FROM HORSES MOUTH

ST LOUIS FED

"Finally, it should be noted that QE2 could have adverse
effects. For example, Plosser has expressed concern that if
the FOMC undertakes QE2 and the actions are ineffective,
it could damage the “Fed’s credibility and possibly erode the
effectiveness of our future actions to ensure price stability.”
He suggests that QE2 might also raise concerns that “the
Fed is seeking to monetize the deficit [which] might make
it more difficult to return to normal policy” in the future. ■"

"The effect of QE2 on interest rates
could be small and limited to an
announcement effect."

And this rally is based on what???

D