Unclear whether Fed’s QE bond buying has helped economy: Fisher

Unclear whether Fed’s bond buying has helped economy: Fisher

8:36am EDT

(Reuters) – While the Federal Reserve’s accommodative policies have boosted stocks and helped the rich, it is unclear whether they are doing enough for the broader U.S. economy, a top central bank official said on Monday. “We’ve made rich people richer…,” Dallas Fed President Richard Fisher said on CNBC television. “Question is what have we done for working men and women in America?” Fisher, who has long opposed the Fed’s bond-buying program and wants to reduce it, added he expects real gross domestic product growth of more than 2.5 percent by year end. The central bank is buying $45 billion in Treasury bonds and $40 billion in mortgage bonds each month in an effort to encourage investment, hiring and economic growth in part because the unemployment rate remains high at 7.5 percent.The benchmark S&P 500 stock index .SPX has risen some 16 percent since the so-called quantitative easing (QE) program was launched in September, 2012.

Fisher’s hawkish views have in the past few years been largely ignored by Chairman Ben Bernanke and the majority of Fed policymakers, but investors are now anxiously predicting when the bond-buying will be reduced.

On Monday, Fisher warned that the Fed could be buying all of the gross issuance of mortgage backed securities if it keeps up the current pace. “We have to think about our fiduciary duty long term,” he said.

Noting there are other Fed officials who agree with him, Fisher, who does not have a vote on policy this year, highlighted comments last week by centrist San Francisco Fed President John Williams who said the central bank could trim its purchases this summer.

“I think the odds are in favor … of dialing this back a little bit or keeping it at its current pace,” as opposed to increasing the purchases, he said.

The Fed has a policy meeting set for June 18-19.

Asked who might succeed Bernanke when the chairman’s term expires early next year, Fisher said: “I personally would like to see Ben stay. I think he is extraordinary and has progressed enormously on the job.” Fed Vice Chair Janet Yellen “is extremely capable, there are other capable people,” he said. “I can tell you one thing for certain: it won’t be me.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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