Fed’s Dudley: Fed likely to complete programs

NY Fed president Dudley, a permanent member of the FOMC, told CNBC that the Fed is likely to complete its full MBS and Treasury purchase programs as they don’t like to go against market expectations. The Fed’s balance sheet is more likely than not to end up at about $2.5 trln from about $2 trln today.

The Fed is not monetizing the US debt in any meaningful way, he said. The Treasury buying is being done not to facilitate Treasury Department issuance but to ease financial conditions. One Fed funds went to zero, there was no where else for the Fed to go to ease, he said.

Asked about the success of the Fed asset purchases, he called the MBS program a clear success while noting Treasury purchases were more ambiguous.