NEW YORK--Federal Reserve Bank of Dallas President Richard Fisher said Monday that it is time for the central bank to begin winding down its easy-money policies and give a clear time table for how that process will play out.
"The current program of purchasing $85 billion per month in U.S. Treasuries and mortgage-backed securities comes at a cost that far exceeds its purported benefits," Mr. Fisher said. "We at the Fed should begin tapering back our bond purchases at the earliest opportunity."
"To enable the markets to digest this change of course with minimal disruption, we should do so within the context of a clearly articulated, well-defined calendar for reducing purchases on a steady path to zero," he said.
Mr. Fisher said that when the Fed does begin to cut its bond purchases, it should make it clear the reductions will continue as long as there is no "serious economic crisis" to argue for a different policy path. The official said slower bond purchases don't argue for raising short-term rates any time soon. He said "we may wish to keep overnight rates low for a prolonged period, depending on economic developments."
And that's for the bond market.
Fisher speaks again at 6:30, the market's strange lack of movement reminds me of my own admonition, "Be careful of a dull market", especially in a situation like this.
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