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Fed might need to ramp up asset purchases as economy falls
Federal Reserve policymakers might need to accelerate their purchases of assets, including mortgage securities, as the job market and economy continue to decline. Fed watchers are concerned that the central bank's balance sheet has fallen 17% since its peak in December. "It takes massive balance-sheet expansion to generate significant easing in financial conditions," said Andrew Tilton, an economist at Goldman Sachs. "More needs to be done." The Federal Open Market Committee meets in Washington this week. Bloomberg (17 Mar.)

Drop in gilt yields might prompt Fed to buy Treasuries: Federal Reserve Chairman Ben Bernanke has discussed the idea of buying government securities to boost the supply of money, but Bank of England Governor Mervyn King actually made the move. The results have been encouraging, as yields on 10-year gilts dropped to at least a two-decade low. "The BoE is providing an actual experiment in answering some of the concerns that the Fed has about the effectiveness" of the strategy, said Laurence Meyer, former governor of the Fed. Bloomberg (16 Mar.)

*I guess the stress tests aren't going over so well...