« St. Lous Fed’s Bullard Advocates Selling MBS Stockpile Gradually in Late 2010 (Who Would Buy?) »

The president of the Federal Reserve Bank of St. Louis said Monday the U.S. central bank should begin gradually selling its mortgage securities holdings later this year despite concerns from some investors the move would raise mortgage rates.

James Bullard said in an interview the asset sales should happen before the Fed hikes short-term interest rates, a sequencing that is still being debated within the central bank. He also said the market was putting too high the odds that the Fed’s first rate hike will come in November.

To be sure, the Fed has yet to complete the purchase of $1.25 trillion in mortgage-backed securities that it plans by the end of March — part of the extraordinary measures put in place to counter the financial crisis — and is still at least several months away from tightening policy. But the central bank is already looking ahead to when the economy will be strong enough to warrant tighter credit.

“If the economy stays on track, I’d expect that at some point we’d entertain the possibility of asset sales,” said Mr. Bullard, a 2010 voting member of the Fed’s policy-making arm, adding it could happen later this year. The Fed official said the asset sales should be very slow at first to test markets.

Continue reading at the WSJ  >>

-----

To Whom Does The Fed Intend To Sell It's MBS  ??

By the end of March, the Federal Reserve is set to end its mortgage-backed securities purchase program. This program was created to help alleviate the credit crunch for residential mortgages during the financial crisis. It has worked pretty well. Once the program ends next month the Fed will have approximately $1.25 trillion in MBS on its balance sheet. The Wall Street Journal's Real Time Economics blog reports that St. Louis Fed President James Bullard favors beginning to sell this MBS soon. My question for him would be: to whom?

Comments

[RecoverylessRecovery]

"The Wall Street Journal's Real Time Economics blog reports that St. Louis Fed President James Bullard favors beginning to sell this MBS soon. My question for him would be: to whom?"

To the U.S. federal government, that's who! They've already been purchasing their own massive debt covertly for several years now.