Fed’s Fisher wants October end to QE3

Fed’s Fisher wants October end to QE3; sees no 2014 rate hike

6:37pm EDT

By Ann Saphir

(Reuters) – Richard Fisher, one of the Federal Reserve’s most ardent policy hawks, said on Tuesday he would favor ending the U.S. central bank’s massive bond-buying program in October, but said he does not expect the Fed to start raising interest rates until next year.

“The odds are slim” of a rate rise immediately after the bond-buying program is ended, Fisher, president of the Dallas Federal Reserve, told Reuters in a telephone interview.

“I don’t expect we’ll raise short-term rates this year,” said Fisher, who is a voting member of the Fed’s policy-setting committee this year.

After years of extraordinary interventions designed to push down borrowing costs and boost hiring and investment, the Fed has been winding down its current program of quantitative easing, known as QE3. Fisher opposed the program from its beginning.

The Fed launched QE3 in September 2012 and had been buying $85 billion a month in Treasuries and mortgage-backed securities. In December the Fed voted to scale back the monthly purchases by $10 billion, and it has continued to scale back the purchases by $10 billion at each of its subsequent three meetings.

When policymakers next meet in two weeks, they are expected to continue trimming the program, but at the same time to pledge to keep interest rates near zero to help nurse the recovery.

If the Fed continues on its current pace, its monthly purchase of bonds will be down to $15 billion by the time it meets in October.

“I will vote to end it in October,” Fisher said.

Some of Fisher’s fellow policy hawks, notably Kansas City Fed President Esther George, have pushed to raise interest rates shortly after bond-buying ends. Fisher has taken no such stance.

The timing of a rate hike “depends on developments in the economy,” he said, including inflation and job growth. “I am not going to focus on raising rates until we have completed the wind-down.”

 

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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