Fed’s Evans Says Low Rates Should Have Created Refinancing Boom

Federal Reserve Bank of Chicago President Charles Evans said the Fed policy of holding interest rates close to zero should have prompted a boom in mortgage refinancing in a “moribund” U.S. housing market.

“Accommodative monetary policy is healthy, yet there are a lot of challenges,” Evans said today in a speech in Chicago. “The housing market looks relatively moribund,” and “we should have seen an enormous refinancing wave” from low interest rates.

Evans, one of the Fed’s most vocal advocates for more easing, reiterated his view that the central bank should say it won’t raise interest rates until either unemployment falls below 7 percent or inflation increases above 3 percent over “the medium term.” The Federal Open Market Committee plans to meet June 19-20.