Jan 31 The Federal Reserve's decision to ratchet
down its massive bond-buying program was a modest and positive
step, a top Fed official said on Friday, but continued
super-easy policies pose risks both at home and abroad.
"I remain concerned that continuation of these policies
could have significant long-term costs," Kansas City Federal
Reserve President Esther George said at a Basel
Committee/Financial Stability Institute high-level meeting in
Cape Town, South Africa, according to written remarks released
by the regional Fed bank.
Already, she said, there are signs that banks are "chasing
yields," building up risky bets that could threaten financial
stability longer term, she said. And the negative effects of
super-easy policies are not confined to the countries, like the
United States, that pursue them, she said.
"Such policies can influence other countries by distorting
their exchange rates and balance of payment positions, capital
flows and rates of credit expansion," she said.
George has been a stalwart opponent of the Fed's bond-buying
program. Last year she consistently cast her vote against the
Fed's policy on this until the final meeting in December when
the U.S. central bank decided to begin winding it down.