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Tarullo says Fed should buy mortgage bonds
Calcutta News.Net
Friday 21st October, 2011
A voting member of the policy-making committee of the Federal Reserve has called for the US central bank to buy mortgage bonds to spur economic growth.
Daniel Tarullo, a Fed governor, said that another round of purchases of mortgage-backed securities by the Federal Reserve could help the economy by further lowering interest rates, including mortgage rates.
Tarullo is one of 10 Fed officials with a vote on the Federal Open Market Committee, a panel of Fed governors and regional bank presidents who meet eight times a year to set interest-rate policies.
His suggestion is certain to generate opposition from fellow committee members. Three members of the policy-making committee have already dissented at recent meetings over less dramatic moves, arguing that the Fed risks triggering inflation.
Dallas Fed President Richard Fisher, Minneapolis Fed President Narayana Kocherlakota and Philadelphia Fed President Charles Plosser, argue that the Fed has done all it can and further action runs the risk of making inflation worse once the economy gains momentum.
Tarullo may be backed by Eric Rosengren, president of the Federal Reserve Bank of Boston and Charles Evans, head of the Chicago Federal Reserve Bank, both of whom have argued for stronger policy moves.
They contend that the economy, with unemployment stuck around 9%, needs more help.
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