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Fed's Dudley Warns That QE2 Exit Could Take Years

A top U.S. Federal Reserve official defended the Fed's controversial bond-buying program on Tuesday, saying it could be years before pulling back easy money policies is warranted.

"This exit could be years away," New York Federal Reserve President William Dudley said an interview on CNBC. A transcript of the interview was made public.

The dollar fell against the euro and the yen on the comments.

Dudley cautioned that it will take months of adding 200,000 to 300,000 jobs to foster a meaningful recovery, and said the Fed's program to buy $600 billion in longer-term Treasurys is unlikely to generate a spurt of growth.

"Modest effect. It's not a fantasy. It's not a magic wand," he said.