NEW YORK – The Federal Reserve should consider further accommodation if the benefits outweigh the costs, Federal Reserve Bank of New York President William C. Dudley said Friday.
“Because the outlook for unemployment is unacceptably high relative to our dual mandate and the outlook for inflation is moderate, I believe it is also appropriate to continue to evaluate whether we could provide additional accommodation in a manner that produces more benefits than costs, regardless of whether action in housing is undertaken or not,” he told the New Jersey Bankers Association Economic Forum, according to prepared text released by the Fed.
“Monetary policy and housing policy are much more complements than substitutes,” he said.
Noting that housing weakness cuts spending, Dudley reiterated his call for the government to take a "comprehensive approach" to stabilize the real estate market.
Improved access to mortgage credit, clearing refinancing obstacles, bridge financing to stem foreclosures, and accelerated principal reduction should all be part of policy, he said.
Reform of financing methods, including Fannie Mae and Freddie Mac, also deserve consideration.
