Fed should cut back on MBS buys soon, wait on Treasuries: Fisher

EL PASO, Tex. Wed Apr 10, 2013 6:52pm EDT

Federal Reserve Bank of Dallas President Richard Fisher (C) takes the stage to speak about the concept of breaking up 'too big to fail' banks to a breakout group at the Conservative Political Action Conference (CPAC) in National Harbor, Maryland, March 16, 2013. REUTERS/Jonathan Ernst

Federal Reserve Bank of Dallas President Richard Fisher (C) takes the stage to speak about the concept of breaking up 'too big to fail' banks to a breakout group at the Conservative Political Action Conference (CPAC) in National Harbor, Maryland, March 16, 2013.

Credit: Reuters/Jonathan Ernst

EL PASO, Tex. (Reuters) - The Federal Reserve should cut back on purchases of housing bonds as soon as its next policy-setting meeting, but it should wait to see what Congress does on the fiscal front before trimming Treasury purchases, a top Fed official said on Wednesday.

As for the central bank's goal of boosting the moribund housing market through purchases of mortgage-backed securities, Richard Fisher, president of the Federal Reserve Bank of Dallas, said, "It is mission accomplished."

Fisher, who spoke to reporters after a speech at the University of Texas at El Paso, said the housing market has come back and there are signs of speculation.

But the Fed should wait on trimming its purchases of federal debt until it is more certain about how Congress plans to approach the budget, he said. Fed policymakers worry that if Congress tightens fiscal policy too much, economic growth could suffer.

Still, Fisher said he would prefer that the Fed end both bond-buying programs by the end of the year.

"I think we could start tapering back significantly and ending by year end, certainly our mortgage-backed securities program, and maybe even ending it earlier," he said. The Fed could start cutting back the MBS program by its next meeting or at the latest by June, he said.

(Reporting by Ann Saphir; Editing by Leslie Adler)

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