The percentage of economists who consider monetary policy “somewhat too easy” rose to 40 percent compared with 27 percent in a survey prior to the FOMC’s Dec. 11-12 meeting.
Boston Fed President Eric Rosengren, an FOMC voter this year, sees Fed accommodation working, citing recent improvement in the housing market and in auto sales.
“The most interest-sensitive sectors have been responding to the monetary stimulus from the Fed, and this stimulus has provided a major source of strength for the economy last year,” Rosengren said in a Jan. 15 speech in Providence, Rhode Island. “And it is likely to be a source of support in 2013.”
Vehicle Sales
In December, light vehicles sold at an annualized pace of 15.3 million, down slightly from November’s pace of 15.46 million, which was the highest since 2008. Builders broke ground on new homes at an annual pace of 954,000 last month, also the highest since 2008.
“Housing data continue to corroborate that something real is going on here, that housing has turned the corner,” said Josh Feinman, the New York-based global chief economist for DB Advisors, the Deutsche Bank AG asset management unit that oversees about $228 billion, and a former Fed economist. “That’s been a huge headwind obviously holding us back.”
An improving economic outlook has helped drive stocks to the highest level in more than five years and yesterday pushed up the yield on Treasury 10-year notes briefly to 2 percent for the first time since April.
The Standard & Poor’s 500 Index closed Jan. 25 at 1,502.96, the highest since Dec. 10, 2007, and ended trading yesterday at 1,500.18, down 0.2 percent. The yield on the 10-year Treasury note rose yesterday one basis point, or 0.01 percentage point, to 1.96 percent in New York.
$3 Trillion
St. Louis Fed President James Bullard and Kansas City’s Esther George are among regional bank presidents voicing concern about the risks from bond buying, which this month pushed the balance sheet above $3 trillion for the first time.