Fed will not end Stimulus
http://www.nytimes.com/2013/03/18/business/economy/federal-reserve-expected-to-continue-stimulus-tries-to-reassure-investors.html
Unlike recent years, the Federal Reserve will not be pausing their efforts to stimulate the economy because these pauses are the main reason it has taken this long to stimulate the economy. Even though data suggests that growth is quickening, the central bank continues to buy $85 billion each month in treasury and mortgage-back securities in effort to have unemployment fall quicker. The Fed has said that it will continue to stimulate the economy for an
unusually extended period, even as the recovery gains strength. Since
the benefits of that policy depend on its credibility, it is searching
for ways to communicate more clearly with investors so that expectations
of its eventual retreat do not become a premature drag on growth.
If the fed continues to buy mortgage backed securities then we could be lulled into a false security that is the housing increases that have been shown may start to revert back to the ways they were before the recession and we may see another bubble burst
ReplyDelete