Should the Fed Keep Buying Mortgage Backs?

The Federal Reserve should continue to buy mortgage-backed securities past its self-set deadline of April 1, James Bullard, president of Fed Bank of St. Louis, told an audience in Shanghai on Monday.

Bullard argued that the Fed should continue the purchases “at a low level initially” and monitor the result to determine whether it needs to increase the purchases to add more liquidity – and stability – to the market.

Bullard also said the Fed Open Market Committee will discuss the issue at its meeting later this month.

Source: The Wall Street Journal (01/10/2010)