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Fed will closely watch housing prices

Federal Reserve Governor Edward Gramlich said Wednesday that the U.S. central bank was monitoring housing prices but did not consider they were at levels that warranted any specific policy action.
/ Source: Reuters

Federal Reserve Governor Edward Gramlich said Wednesday that the U.S. central bank was monitoring housing prices but did not consider they were at levels that warranted any specific policy action.

Answering questions at a panel session on low-income housing organized by the Center for Economic and Policy research, Gramlich said housing prices were not by themselves a topic that monetary policymakers at the Fed considered.

But he said the Fed was closely watching prices for homes.

"This does not qualify for (specific) monetary policy treatment at this point. But we are going to keep an eye on it," Gramlich said.

Earlier he told the group that while it was possible that house prices were in a bubble, factors including a scarcity of land for building were among reasons explaining lofty prices.

Gramlich said the Fed was aware of regional disparities in housing prices and noted "We are always looking for signs that some relative prices are out of line."

He said that he did not see a troubling rise in overall inflation currently.

"We have not seen any worrying rise of inflation at this point," Gramlich told reporters after the session. "We're obviously examining the numbers carefully to pick up any early signs. But I don't think we have seen any early signs at this point."