SANTA BARBARA, Calif. — Former Federal Reserve Board governor Frederic Mishkin warned Tuesday that the Fed’s large and growing holdings of mortgage-backed securities pose “real dangers” for the future.
Mishkin, now a Columbia University professor, also stressed the importance of anchoring inflation expectations.
“The key to the Fed balance sheet is not its size but its composition,” Mishkin told a San Francisco Federal Reserve Bank conference. He added that he sees “real dangers” for the future in the Fed’s massive holdings of agency-backed MBS and in the central bank being such a predominant player in the mortgage market.
— Market News International
