Chicago Fed: Double Dip Risk Increasing

Chicago Federal Reserve president Charles Evans says the risks of a double dip have increased recently, according to a report from Reuters.

"A double dip is not the most likely outcome but I am concerned about how strong the recovery will be," Evans said at a housing event in Indianapolis.

Evans went on to say that the Fed's ultra-easy monetary policy is appropriate.

Evans said that the unemployment rate, currently at 9.5%, is likely to remain high for some time.

In response, the Federal Reserve has vowed to keep monetary policy easy, and it recently announced it was rolling over maturing mortgage backed securities into U.S. Treasuries.

He said that the securitization process of mortgages has made it less likely lenders will modify underwater mortgages. "The securitization process appears to have created conflicts between the interests of servicers and lenders," Evans said. "These and other impediments have kept the number of modifications lower than we might have hoped."

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