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June 25, 2013

Fed fights back against ‘feral hogs’

A top US central banker on Monday warned the “feral hogs” of financial markets against trying to force the Federal Reserve to shelve plans to slow its bond buying, as yields on US Treasuries climbed to their highest level since August 2011.

Richard Fisher, president of the Dallas Federal Reserve, said in an interview with the Financial Times that the Fed had anticipated a lively market reaction to last week’s announcement that it was considering bringing an end to its $85bn/month bond purchases.

But Mr Fisher, a member of the rate-setting Federal Open Market Committee, warned that markets should not think the Fed would end up propping up the economy indefinitely, or that it could be pushed to keep buying Treasuries at the same pace and, in so doing, keep inflating asset price bubbles.

The former hedge fund manager likened the market reaction to Fed chairman Ben Bernanke’s signal that the bank could begin reducing its $85bn monthly bond purchases before the end of this year to the 1992 attack led by investor George Soros on the Bank of England. The latter led to the UK crashing out of the European exchange rate mechanism.”

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Read full Financial Times article here

 
 
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