Federal Reserve Chairman Jerome Powell said that the central bank is closely monitoring surging home prices that could make it more difficult for entry-level borrowers to obtain mortgage loans. Further more, he stated that concerns of a housing bubble are overblown.
Last week at a press conference after a meeting of the Federal Open Market Committee that he doesn’t have any financial stability concerns about such a competitive real estate market.
“It’s part of a strong economy with people having money to spend and wanting to invest in housing, so in that sense it’s good,” he said. “It’s clearly the strongest housing market that we’ve seen since the global financial crisis. My hope would be that over time, housing builders can react to this demand and come up with more supply and workers will come back to work in that industry.”
Unlike in the housing and financial crisis of 2006, Powell added, borrowers looking to buy homes are “in very good shape financially.”
“We don’t have that kind of thing where we have a housing bubble where people are over levered and owning a lot of houses,” he said. “There’s no question, though, that housing prices are going up and so we’re watching that carefully.”
Powell also reiterated separately that he wants the Fed to carefully explore the idea of a central bank digital currency in the U.S. without worrying about the pace at which other countries are adopting digital currencies. China, for one, has moved quickly on its “digital yuan,” raising concern from some officials that the country is looking to oust the dollar as the world’s reserve currency.
The Federal Reserve Bank of Boston is working with the Massachusetts Institute of Technology to develop and test a hypothetical central bank digital currency that would inform the central bank’s work around the concept. Powell has also previously said that the Fed would not move forward on a digital currency without a blessing from Congress.
“Central bank digital currencies are now possible, and we’re going to see some of them around the world, and we need to understand whether that’s something that would be a good thing for the people that we serve [and] how would it work in our system,” he said.