The Federal Reserve should pare its bond buying as quickly as possible, even if doing so sends stock prices tumbling, because more bond buying risks inflation and makes an eventual exit from easy policies more difficult, a top Fed official said on Tuesday.
Richard Fisher, president of the Dallas Federal Reserve Bank and one of the Fed’s most hawkish policymakers, said that continued purchases by the U.S. central bank of Treasuries and mortgage-backed securities carries the risk of fueling an asset price bubble, though he stressed that no such bubble now exists.
Quoting analyst Peter Boockvar, Fisher said investors are seeing the world through “beer goggles.” “Things often look better when one is under the influence of free-flowing liquidity.”
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