Boston Fed President Eric Rosengren and Chicago Fed President Charles Evans spoke at the "Monetary Policy in a Low Inflation Environment" economic conference at the Boston Federal Reserve. They want to bring down longer term rates (Treasury yields) even further by using LSAP channels (Large Scale Asset Purchases) to avoid the Japanese deflation trap. They believe these policies will drive lending, mortgage refinancing activity and reflate the economy. Hedge fund manager David Tepper mentioned this on CNBC that the Fed would lower mortgage rates significantly to avoid deflation. Read the speech slides below. Gregor Macdonald during MacroTwits Hour mentioned these speeches (hat tip). Here is Ben Bernanke's full speech at the Boston Fed conference. Also read "NY Fed's Brian Sack on Asset Prices and Balance Sheet Policy 10/4". The Federal Reserve and Government Sponsored Enterprises (Freddie Mac, Fannie Mae and the FHA) are deeply involved in the markets right now.
Revisiting Monetary Policy in a Low Inflation Environment: Eric Rosengren (Boston Fed)
Chicago Fed's Charles Evans: Monetary Policy in a Low-Inflation Environment: Developing a State-Contingent Price-Level Target