Bloomberg News

George Says Fed Sale of Assets May Disrupt Financial Markets

February 12, 2013

Kansas City Federal Reserve Bank President Esther George said the central bank may prompt instability in financial markets when it eventually begins to sell assets from its record balance sheet.

The Fed’s current plan for selling securities “could be disruptive to market functioning” and cause “an unwelcome rise in mortgage interest rates,” George said today in a speech at the University of Nebraska-Omaha.

George dissented last month during her first meeting as a voting member of the Federal Open Market Committee, opposing a decision to press on with $85 billion in monthly bond purchases aimed at spurring growth and reducing unemployment.

The Kansas City Fed president voiced concern that “the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations,” according to the FOMC’s Jan. 30 statement.

To contact the reporter on this story: Joshua Zumbrun in Omaha, Nebraska at jzumbrun@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net


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