Fed's Fisher floats Texas century bond to exploit low rates

NEW YORK Wed Feb 27, 2013 4:29pm EST

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NEW YORK Feb 27 (Reuters) - A top Federal Reserve official who has fought the U.S. central bank's efforts to push down borrowing costs on Wednesday suggested his home state should take advantage of historically low interest rates to borrow for the next 100 years.

"Might it make sense for Texas to issue ultra-long bonds at currently prevailing ultra-low rates to finance the state's longer-term infrastructure needs?" Dallas Fed President Richard Fisher said in remarks prepared for delivery at Columbia University. "I have in mind a Texas Century Bond....If ever there were a window for such an issuance, it surely would be now."

Fisher is among the Fed's most vocal opponents of the central bank's latest round of quantitative easing, warning that the bond buying will do little to boost job creation and could in fact slow the recovery.

But his discomfort with super-easy monetary policy has not stopped him from thinking that his own state might do well to exploit it.

Mexico, Coca Cola and the Massachusetts Institute of Technology are among a handful borrowers that have issued century bonds in recent years in a bid to capitalize on low rates.

"The public benefit would come from saving on interest payments that will inevitably rise over time from their unprecedented low levels - certainly sometime in the next 100 years - meanwhile financing highways, water projects, universities and the like that will be needed to continue serving the state's growing population and expanding economy," Fisher said.

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