By Sheila Mullan

NEW YORK (MNI) – Boston Federal Reserve Bank President Eric Rosengren said
what while the Fed’s bond-buying operations “have not worked out perfectly, they
have worked out” generally speaking and said “we want a faster-growing economy.”

Speaking at the Boston and New York Fed’s joint-workshop on The Spread
Between Primary and Secondary Mortgage Rates, Rosengren said the bond buying has
generally alleviated distress in the housing market.

He said he felt the Fed’s operations should be tied to an economic
threshold to make it more directly clear what the bond-buying operations are
aimed at.

Rosengren in response to a question about how much the Fed can buy without
affecting the MBS market said Fed officials have an ongoing “discussion” on that
matter,” and there is “potentially” a cost if the Fed would need to “get out”
quickly in any one particular MBS market sector, as opposed to the larger and
more liquid Treasuries market.

The Fed also is concerned about whether there would be “inflationary
impacts” from its MBS and Treasuries bond buying programs, he said.

“We spend a lot of time” examining such issues as potential inflation.”

Fed officials also are focusing on the current MBS coupon, because its
operations want to “get at the rate which the homebuyer would pay” for a
mortgage at this point. The Fed’s choice to date “has not been” to do an
Operation Twist with MBS.

–MNI New York Bureau; tel: +1 212-669-6432; email: