Feds Say: It’s Time the Market Stands on its Own
April 1 will be the first day that the Federal Reserve will end its debt purchase program and allow the struggling U.S. mortgage market to operate unassisted. As a result, the Fed is predicting mortgage rates could rise about three-quarters of a percent to about 6 percent according to a statement by Boston Fed President Eric Rosengren.
There is a fear here in the states and apparently in the worldwide court of opinion that the U.S. government is simply printing money to use to purchase mortgage-related securities. Analysts say this is largely contributing to the decision by the Fed to pull back. If that fear caused a sell-off of U.S. government bonds, it would push borrowing costs substantially higher and derail the economic recovery.
As in any decision of this magnitude most likely it will be evaluated and adjusted as needed. Inflation always follows recession and must be monitored closely to keep it in check. If they can!
Tags: bonds, economy, fed, inflation, interest rate, market mortgage rates, recession, recovery
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