The Federal Reserve should continue its MBS purchase program past the March 31 cutoff date, according to James Bullard, president of the St. Louis Federal Reserve Bank.

"I have advocated to keep the asset-purchase program open but at a very low level and wait and see want happens," Bullard told Dow Jones Newswires.

To support the secondary mortgage market, the Federal Reserve has purchased nearly $850 billion in Fannie Mae, Freddie Mac and Ginnie Mae MBs since December 2008.

Bullard said in a recent speech that he would like the FOMC to adopt a "state-contingent policy that would allow for the adjustment of asset purchases as new information on the economy becomes available."

At a Sept. 23 Federal Open Market Committee meeting, the Fed decided to extend its $1.25 trillion MBS purchase program through the first quarter and slow its MBS purchases.

Since then, weekly MBS purchases have slowed to a $16 billion to $19 billion range from the faster pace of $20 billion to $25 billion a week.

During the week of Nov. 11, however, the purchase activity spiked to $45.3 billion, as the Fed acquired $39.5 billion in Fannie MBS.

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