Fisher Says Fed Must Ensure QE Doesn’t Disrupt Financial Markets

Federal Reserve Bank of Dallas President Richard Fisher, who has opposed additional stimulus and votes on policy next year, said the Fed must ensure its bond buying program doesn’t disrupt financial markets.

“We have to make sure that the actions we take are taking into consideration financial stability,” Fisher said today in Dallas. “This is one of the arguments we had: If we go down this path, what will the cost be?”

Fisher spoke after the yield on the benchmark 10-year Treasury note climbed to a two-year high of 2.98 percent partly on speculation policy makers will decide to begin tapering $85 billion in monthly bond purchases at a Sept. 17-18 meeting.

The key question with asset purchases -- which have pushed up the Fed’s balance sheet to $3.64 trillion -- “is preserving financial stability,” Fisher said in response to an audience question after a speech to the Dallas Estate Planning Council. He said he “lost the argument” last year on whether to push on with record easing.

“Now the question is, how do we put it to an end?” he said. “This doesn’t go on forever.”

The Fed has pledged for more than a year to press on with asset purchases until achieving sustainable gains in the labor market. The central bank announced a third round of quantitative easing in September 2012 to reduce longer-term interest rates, stoke economic growth and combat unemployment.

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