Nov
5
Fed’s Hoenig Hammers Housing Subsidies
Filed Under Housing News
Tom Hoenig, the Fed banker who has said at seven straight Federal Open Market Committee meetings that he believes the Fed’s current policy is a mistake, repeated Friday that he believes the Fed should raise interest rates to put the economy on a path to balanced growth.
This is not a huge surprise, as Hoenig has spent the entire year urging his colleagues on the FOMC to wean the economy off the zero-rate drip it has been on for almost two years.
Even so, you’d have to say he picked about the toughest possible crowd to make his latest pitch for a normalized rate policy: the annual conference of the National Association of Realtors.
“I realize that advocating an interest rate increase is not the best applause line at a Realtors’ conference,” said Hoenig, who is president of the Federal Reserve Bank of Kansas City. “However, I believe that moving rates modestly off of zero, where they have been since December 2008, still represents highly accommodative monetary policy. More importantly, such action is necessary if we are to ensure a more stable economy that can thereby foster a more sustainable housing market.”
Speaking of which, Hoenig wasn’t content to propose just one policy the Realtors hate. Having laid out the case for higher rates, he went on to explain why he believes the government should vastly scale back subsidies it provides to homeowners.
“Housing policy is badly flawed, and today’s budget environment requires reform,” he said Friday morning in New Orleans. “We must move toward a system with fewer subsidies and misdirected incentives.”
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