The Federal Reserve does not plan to tighten its monetary policy "for an extended period," Fed Vice Chairman Donald Kohn said. He also addressed fears of inflation, which critics said will follow the Fed's policy of quantitative easing. Kohn said considerable expansion of the Fed's balance sheet would be followed by a policy of paying interest on reserves that are held with it by commercial banks. He said the payments would enable the central bank to control short-term interest rates, and thus inflation.
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