MNI BRIEF: Fed's George Says MBS-Led Taper to be Considered

Kansas City Fed President Esther George said Monday there will come a time for the central bank to begin talking about the reduction of its asset purchase program, and given the hot housing market the central bank will discuss the option of reducing its USD40 billion monthly MBS purchases at a faster rate than Treasuries.

"That will have to be part of the discussion as we get into that and really think about what effect our purchases are having on broader financial markets, as we begin to think about shifting gears," said George, in a question-and-answer session at an agricultural symposium. "In thinking about the mix of assets and how those reductions take place, it's really premature for me to speculate on that. I understand the question though, which is to say, we're an influence in those mortgage markets, and given that we see the housing market in particular, experiencing a lot of heating up."

Current and former Fed officials have told MNI the Fed will consider leading a taper of its QE program with a larger reduction of mortgage bonds than Treasuries.