A top Federal Reserve official said Tuesday that the Fed should launch another bond-buying program of whatever size and duration is necessary to get the economy back on its feet, signaling support from some U.S. policymakers for aggressive steps to boost the flagging recovery.
Boston Fed Bank President Eric Rosengren said in interviews with the New York Times and CNBC that the Fed should start buying Treasury and mortgage-backed securities and continue doing so until the economy is back to full strength.
“You continue to do it until it’s clear that you’re no longer treading water,” Rosengren told the New York Times.
Rosengren, not a voter this year on the Fed’s policy-setting Federal Open Market Committee, is considered to be among the most outspoken “doves” who favor an activist approach to stimulating growth and bringing down the high unemployment rate.
His suggestion that the Fed not place an upper limit to its bond buying represents a new line of thinking in the many unorthodox steps the central bank has taken since it exhausted its conventional tool: control over short-term interest rates. The Fed cut the benchmark federal funds rate to near zero in December 2008.
Monetary policy became part of the political discussion this weekend with presumptive Republican presidential candidate Mitt Romney saying Sunday that he does not think further Fed bond buying would help the U.S. economy.
Since the Fed cut short-term rates to the bone, it has launched two rounds of bond buying, referred to as quantitative easing, worth a total of $2.3 trillion. When buying bonds, the Fed has always said how much it planned to buy and over what period.