JEKYLL ISLAND, Ga. — Kansas Federal Reserve Bank president Thomas Hoenig on Friday renewed his call for raising the federal funds rate. His remarks came two days after his fellow Fed policymakers reaffirmed a pledge to keep the overnight money market rate near zero "for an extended period."
Hoenig, who dissented against the Federal Open Market Committee's zero rate policy and its resumption of quantitative easing Wednesday, contended that the Fed needs to start "normalizing" rates to achieve stable economic growth and housing recovery.
He also called for "significant change" in the web of government subsidies for housing, in particular the role of government-sponsored enterprises Fannie Mae and Freddie Mac, in remarks prepared for delivery to the National Association of Realtors in New Orleans.
"I realize that advocating an interest rate increase is not the best applause line at a realtors' conference," Hoenig said. "However, I believe that moving rates modestly off of zero, where they have been since December 2008, still represents highly accommodative monetary policy."