By Steven K. Beckner
CHARLOTTE, N.C. (MNI) – Richmond Federal Reserve Bank President
Jeffrey Lacker said Monday that recent heavy bidding at U.S. Treasury
auctions reflects both long-run confidence in the U.S. economy and a
flight to safety by investors around the world.
Lacker, answering questions following a speech to the Charlotte
Chamber of Commerce, said he does not know the risks of further
downgrades of U.S. government debt but said the focus of policymakers
should be less on whether more downgrades are coming than on “getting
our fiscal house in order.”
The federal budget deficit needs to be addressed in a “sustainable”
way, he said.
Lacker, who will be a voting member of the Fed’s policymaking
Federal Open Market Committee in 2012, was asked to explain strong
demand for U.S. Treasuries and the resulting low yields.
He replied that “the U.S. Treasury market remains the deepest and
most liquid in the world” and that global investors consider them “an
outstanding credit…based on the fundamentals for the U.S. economy.”
Investors believe in “the ability of our government to draw on
resources that people expect will expand in the future.”
He added that strong demand for Treasury securities is “a sign of
some optimism” about the U.S. and a “sign of demand around the world for
safety.”
** Market News International **
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