The Federal Reserve likely will not need to expand its huge asset purchases, but should keep short-term interest rates near zero for at least several months to nurture a soft recovery, according to a top Fed official.
New York Federal Reserve Bank President William Dudley said Wednesday that the central bank should halt as planned the purchase of up to $1.25 trillion of mortgage-backed securities by March because the economy is starting to improve. "Obviously, if mortgage rates were to back up a lot and if that had a big consequence for the economy, then we very well could rethink the issue about whether we wanted to buy more mortgages," he said.
In transcripts of an interview with PBS television, Dudley also said the target rate will stay at "exceptionally low" levels for "at least six months."
