SF Fed’s Williams supports buying-up mortgage-backed securities

John Williams, president of the Federal Reserve Bank of San Francisco, on February 8 said the Federal Open Market Committee should consider restarting its programme of buying mortgage-backed securities if the economic situation worsens.

At the Bishop Ranch Forum in San Ramon, California, Williams said he expected the pace of economic growth in the US to be "frustratingly slow" and the unemployment rate to remain high for years to come. He said that while the Fed had taken extraordinary action to boost growth and keep inflation low, monetary policy could not "perform magic".

"Lower interest rates alone can't fix all the economy's problems. But they do help. Conditions are far better today than they would be if the Fed hadn't administered such strong medicine. Looking ahead, we may still need to provide more policy accommodation if the economy loses momentum or inflation remains well below 2%. Should that occur, restarting our program of purchasing mortgage-backed securities would likely be the best way to provide a boost to the economy," he said.

Click here to read the speech.