April 15, 2011 / 12:32 AM / in 7 years

Lacker-Fed should sell assets to pare housing debt

BALTIMORE, April 14 (Reuters) - The importance of shedding mortgage-related debt from the Federal Reserve’s holdings suggests the Fed shouldn’t delay selling asset sales from its portfolio, Richmond Federal Reserve Bank President Jeffrey Lacker said on Thursday.

“We ought to have an outright preference to get to a Treasuries-only portfolio as soon as this episode is over,” he told reporters after a speech at the University of Baltimore.

“That to me is an argument for advancing the date of asset sales,” he said. The Fed must decide whether to raise interest rates or sell assets when it is ready to tighten financial conditions.

Halting reinvestment of securities that are rolling off the balance sheet would be likely before sales, Lacker said.

“That’s an obvious approach,” he said. (Reporting by Mark Felsenthal)

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