Fisher Says Fed Should Taper Asset Purchases as Housing Gains

Federal Reserve Bank of Dallas President Richard Fisher said the central bank should start scaling back asset purchases because the housing market “is getting to be quite strong.”

“A little tapering there would help people realize that we’ve bottomed out,” Fisher said today in a television interview with Fox Business Network. “In most states now the housing market is definitely rising, prices are rising, the inventory’s getting tighter.”

Housing has gained as Fed easing helped push mortgage rates to record lows. Home prices rose 6.8 percent in December from a year earlier, according to the Case-Shiller 20 City index, the fastest increase since 2006. The gauge rose every month last year. New home sales accelerated in January to a 437,000 annual pace, the highest since 2008.

The Fed started a third round of quantitative easing in September with $40 billion of monthly agency mortgage-backed securities purchases. The program was expanded in December with $45 billion of monthly purchases of Treasury notes.

“I’m not talking about cutting off the purchase, just tapering it down,” said Fisher, who doesn’t vote on the Federal Open Market Committee this year.

Fisher has been one of the most outspoken critics within the Fed of additional monetary easing by the central bank. He said in January that the potential costs of asset purchases to spur economic growth have begun to outweigh the benefits as the Fed’s balance sheet exceeds $3 trillion.

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