Fed cautious over housing
SOME Federal Reserve officials worried last month that waning government support could snuff out a fragile housing market recovery and a few believed it might be desirable to step up asset purchases.
Labour market weakness remained an important concern for Fed officials, the minutes released last night showed, with officials saying they expect unemployment to remain high for “quite some time”.
Views about policy differed. Some officials said persistently high unemployment might make it desirable at some point to expand or extend large-scale purchases of assets.
However, one policy-maker said improvements in financial markets and in the economy may warrant scaling back the Fed’s purchases and reducing holdings over time.
Fed officials said that in general, the outlook for housing was for gains in activity to continue, although some participants viewed the improvements as “quite tentative.”
Mortgage markets could come under pressure when the MBS purchases wind down, some officials worried.
The Fed has committed to buying $1.25 trillion of mortgage backed securities by the end of March.