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The bond-buying program, at first vilified, can claim success.

By John Detrixhe

Bloomberg News

NEW YORK - Ben Bernanke's $600 billion strike against deflation is paying off, as stock and debt markets rise, bank lending grows and economists forecast faster growth.

The Standard & Poor's 500 Index has gained 13.5 percent since the Federal Reserve chairman announced Nov. 3 the plan to buy Treasury bonds through its so-called quantitative easing policy.

Government bond yields show investors expect consumer prices to rise in line with historical averages. The riskiest companies are obtaining credit at the cheapest borrowing costs ever and Fed data show that commercial and industrial loans outstanding are rising for the first time since 2008.

Bernanke's quantitative easing program, dubbed QE2 by analysts and investors because it followed an earlier round of $1.7 trillion in bond purchases in 2009 and the first quarter of 2010, was criticized by officials around the world.

Chinese Premier Wen Jiabao said that the policy would foster financial instability and asset bubbles. Six days after the Fed suggested at its Sept. 21 meeting that it was ready to start buying Treasury bonds, Brazilian Finance Minister Guido Mantega said governments were engaging in a "currency war." German Finance Minister Wolfgang Schaeuble called the asset-purchase program "clueless" on Nov. 5 and suggested it was designed to erode the value of the dollar.

Six months later, it appears the criticism was misplaced.

"Looking at market indicators, you have to be convinced it's been a success," said Bradley Tank, chief investment officer for fixed-income in Chicago at Neuberger Berman Fixed Income, which oversees about $83 billion. "When you get into periods of aggressive central bank easing, and we're clearly in the most aggressive period of easing that we've ever seen, the markets tend to lead the real economy."

The Fed said last month it won't need to extend the $600 billion buying program beyond its scheduled end next month. Payrolls expanded by 244,000 in April, the biggest gain since May 2010, after a revised 221,000 increase the prior month, the Labor Department said Friday

"We are starting to see the impact, albeit slowly," said Jim Sarni, managing principal in Los Angeles at Payden & Rygel. "The unemployment rate has slowly started to come down. We have a long way to go, but at least it stopped the hemorrhaging."

Not all analysts agree that the policy has been a success.

"It was a failure," said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird & Co. "I don't think it's very healthy to artificially boost stock prices. What are the long-term consequences of that? We don't know. The Fed did this with housing back in the last decade, and the unintended consequences were a disaster."

QE2 has contributed to an 11.9 percent decline since August in the dollar based on Bloomberg Correlation-Weighted Indexes, which measure its performance against nine of the most-traded currencies in the world, including the euro, yen and pound.

Gold and silver reached records in April as investors sought to hedge financial assets against the weakening dollar and accelerating inflation. Rising commodities may be restraining the economy.

The Commerce Department said April 28 that the gross domestic product rose at a 1.8 percent annual rate in the first quarter after a 3.1 percent pace in the final three months of 2010.