Several members of the Federal Reserve have begun in recent days to make calls for the central bank to provide additional accommodative monetary policies.
Fed President Eric Rosengren and Fed Governor Daniel Tarullo each made comments this week that the Fed should consider resuming its purchase of mortgage-backed securities, which would effectively mark the launch of a third round of quantitative easing (QE3). The Fed last purchased mortgage-backed securities as part of QE1.
The intention of such measures would be to further stimulate the housing market, which has shown few signs of improvement despite the rebound in numerous other sectors of the U.S. economy since 2009.
Judging by recent history, another round of quantitative easing would almost certainly be positive for gold prices and other precious metals.
This morning, Reuters published a story with several comments from various Fed members regarding additional monetary policy easing. Highlights of the story are below:
“There is need, and ample room, for additional measures to increase aggregate demand in the near to medium term, particularly in light of the limited upside risks to inflation over the medium term,” said Tarullo, who as a Fed Governor has a permanent vote on monetary policy.
Because the ongoing housing problems are so central to the recession and the anemic nature of the subsequent expansion, the Fed should refocus its efforts on housing, Tarullo said.
“I believe we should move back up toward the top of the list of options the large-scale purchase of additional mortgage-backed securities,” he added. The Fed bought $1.25 trillion worth of mortgage-related debt, starting in 2009.
Tarullo said the effectiveness of an MBS purchase program could be improved by further action to help borrowers whose mortgages are worth more than their homes.
He suggested a government program that helps borrowers whose loans are backed by Fannie Mae and Freddie Mac which could be adjusted, but also said steps could be taken to help underwater borrowers whose loans are not guaranteed by the two government-controlled firms.
“Policy changes directed at this last, larger group of homeowners would have to be carefully designed so as not to transfer credit risk from private investors to the government, and could well require legislation,” he said.
Colossus Minerals Raises C$75M for Serra Pelada Project
Colossus intends to use the net proceeds of the offering to fund advancement of its flagship Serra Pelada Gold-Platinum-Palladium Project in Brazil, as well as for general corporate purposes including working capital. Full Colossus Minerals News Release.
- The Notes will mature on December 31, 2016 and will bear interest, accruing and calculated and payable semi-annually in arrears on June 30 and December 31 of each year, at a rate of between 6% and 13%, dependent on the simple average of the London PM Gold Fixing Price.
- The Notes will yield 9.0% based on the current London PM Gold Fixing Price.
- Each Warrant will entitle the holder to acquire one common share of CSI.TSX at a price of C$8.50 for a period of five years following the closing date of the financing.
