Fed's Fischer says asset purchase program continues to buoy economy

WASHINGTON (Reuters) - Federal Reserve vice chairman Stanley Fischer said on Friday that the Fed's various quantitative easing programs continue to buoy the economy, holding down both long-term interest rates and boosting employment.

Speaking at a conference in New York, Fischer said studies indicate that the Fed's accumulation - and current holding and reinvestment - of some $4.2 trillion in bonds and other securities was holding down the interest on 10-year Treasury notes by as much as 110 basis points, and had cut perhaps 1.25 percentage points from the unemployment rate.

"Asset purchases over more recent years have provided meaningful stimulus to the economy and continue to do so," Fischer said. "These macroeconomic effects are only now manifesting themselves in full."

He said that while the large balance sheet posed some challenges to raising rates, when the time comes, the various tools put in place by the New York Fed "have generally been successful." Those methods include things like raising the interest rate the Fed will pay banks on overnight reserves, in effect siphoning money from other borrowers and pushing up what they would have to pay.

Fischer later told business news network CNBC that he thinks the Fed will raise interest rates "sometime this year."

(Reporting by Howard Schneider; Editing by Chizu Nomiyama)