Data revisions underscored the likelihood of strong third-quarter growth in the US yesterday, as a hawkish Federal Reserve official raised the possibility of cutting short its planned purchases of mortgage-related securities.
Jeffrey Lacker, president of the Richmond Fed, said: “I will be evaluating carefully whether we need or want the additional stimulus that purchasing the full amount authorised under our agency mortgage-backed securities programme would provide.”
The Fed is midway through a programme to purchase up to $1,450bn (€1,020bn, ￡895bn) in mortgage-backed securities and debt issued by Fannie Mae and Freddie Mac. This is the centrepiece of the Fed's efforts to provide additional stimulus to the economy with interest rates stuck at virtually zero.