Fri, Jul 12, 2013 8:35 PM EDT 1:15
The wide divergence of opinion within the Federal Reserve over when to wind down its unprecedented support for the U.S. economy was on full display, starkly illustrating Chairman Ben Bernanke's leadership challenge for the rest of this year. A top U.S. central banker said the Federal Reserve should keep buying bonds at the current pace until inflation rises back up toward the 2-percent target. The remarks illustrate how divided the Fed is on its quantitative easing program. St. Louis Fed President James Bullard, a voter on policy this year, told reporters the Fed would have to rethink its strategy for reducing asset purchases if inflation, now around 1 percent, drifted lower. Are Banks and Housing About to Get Crushed by Rising Rates? The evidence is everywhere: mortgage rates are at a two-year high, applications have fallen for four straight weeks after climbing for more than a year, and Fed Chairman Ben Bernanke says he would have to "push back" if the impact of rising interest rates were jeopardizing the recovery.