With inflation subdued, policymakers should focus on getting the economy back to full employment, a top Federal Reserve official said on Wednesday, calling last week’s policy decision by the Fed "significant."

The Fed announced a $400 billion plan that will tilt its portfolio more heavily toward longer-term bonds to lower longer-term borrowing costs. It also said it was reinvesting the principal payments from its mortgage-related debt to support the housing market.

"We took significant actions last week," Boston Fed President Eric Rosengren told a conference in Sweden, according to remarks prepared for delivery.

"I am very supportive of these actions, which were designed to promote stronger growth and reduce unemployment rates."

Rosengren is one of the most dovish members of the Fed’s policy-setting committee.

The Boston Fed chief pointed to the 17-basis point drop in the spread between the 30-year mortgage yield and the 10-year Treasury yield after the Fed’s announcement, saying he viewed it as a "very significant decline."

The Fed should continue to monitor this spread, and "consider taking action" if it widens significantly again, he said.

All parties involved in the housing markets — which he called a major impediment to recovery — should "redouble their efforts", he said.

"We need to recognize the situation and the broader economic implications of housing’s continued struggles," he said.

The housing sector would have been in worse shape if the Fed hadn’t lowered borrowing costs, he said. But it is also important to review housing policies that may be making monetary policy less effective, he said.

"There should be strong encouragement for the GSEs to focus on the housing recovery so home buyers and those that already have loans can fully benefit from the lower interest rates generated by our monetary policy action," he said, referring to Fannie Mae and Freddie Mac, which are currently under conservatorship by the U.S. government.