Fed’s Williams Says QE3 Poses Risks While Aiding Growth

Federal Reserve Bank of San Francisco President John Williams said the central bank’s unprecedented bond buying may bring unintended consequences as it boosts economic growth without spurring inflation.

Research shows the Fed’s three rounds of asset purchases have been “effective in stimulating growth” by raising prices for financial assets and reducing borrowing costs for businesses and consumers, Williams said today in a speech in Irvine, California. While the unconventional easing poses some risks of inflation, policy makers don’t see signs of unstable prices, he said.