External Fed Review Calls for Guardrails On Asset Purchases

The Federal Reserve should develop a guiding framework for how it deploys large-scale asset buying, according to an external review of the central bank’s longer-run strategy.

The Fed conducts quantitative easing, or the purchase of Treasuries and agency mortgage-backed securities, for two key reasons: to stabilize markets and to stimulate the economy when interest rates are already near zero. But the central bank’s strategy document, which is currently under internal review, makes no mention of the tool.