Fed May Stay in Mortgage Securities
The Federal Reserve isn’t going to go cold turkey from its program to buy mortgage-backed securities, said James Bullard, president of the St. Louis Fed, on Sunday.
The Fed’s purchases of mortgage-backed securities are seen by many as key to keeping rates low and stabilizing the market. The Fed announced earlier this month that the program would end in March.
Bullard said he would like to see the program sustained at a low level as an option for stimulating the economy.
“If the economy came in very weak, let’s say, in 2010—weaker than expected—we would have the option of doing further quantitative easing,” Bullard said. “If the economy came in stronger than expected and inflation expectations started to ratchet up a little bit, we could maybe sell off some of these assets and remove some of the accommodation from our quantitative easing program.”
Source: Bloomberg, Michael McKee and Steve Matthews (11/23/2009)
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