Fed official backs refinancing plan to spur economic growth

Federal Reserve Bank of Boston President Eric Rosengren recently called for more federal programs to help homeowners refinance their mortgages, and believes the Federal Reserve's plan to buy longer-term securities will help spur economic growth. Rosengren said putting more money in the pockets of homeowners through refinancing options will increase consumption and expand the gross domestic product.

Rosengren's comments come in response to the announcement of Operation Twist, a plan the Federal Reserve introduced that aims to buy longer-term Treasuries and sell short-term securities. Rosengren supports the new plan, as well as a proposal to reinvest housing debt into agency mortgage-backed securities in an effort to trigger growth in the housing market, Bloomberg reported.

The Federal Reserve Bank of New York economist Joseph Tracy said any governmental stimulus plan will have a limited capacity to create economic growth unless it takes steps to aid the housing market, the news source reported.

“We need to fold in some pretty serious housing policies at the same time, not just to get housing going, but to get the full benefit of all these policies,” Tracy said at recent a conference hosted by the New York State Society of Certified Public Accountants.

More News