You may have read that the Fed is done with quantitative easing. If youre thinking, great, now rates will jump up: please read. Fed Stimulus Over: What About Interest Rates? The Federal Reserve has ended its bond-purchasing program, known as quantitative easing, saying it is confident in the economic recovery. Since 2008, the Fed has been purchasing mortgages and Treasurys that have helped bring interest rates down to historic lows, but it has been tapering its monthly $10 billion program since December 2013. The central bank plans to hold onto the $4.48 trillion in bonds it has accumulated in purchases since November 2008. For now, the move is expected to keep borrowing costs low for considerable time, the Fed said. The Feds key short-term interest rate has remained low since December 2008, and it has yet to be announced when the rate will begin to rise again. But Capital Economics analysts predict that the Fed will start raising rates in March 2015. Well live just fine without QE [quantitative easing], former U.S. Treasury Secretary Lawrence Summers told Bloomberg Televisions Market Makers. Interest rates at the 10-year are now much lower, not much higher, than they were before QE started. Source: “QE3 Ends, How Long Until Interest Rates Rise?” HousingWire (Oct. 29, 2014); “Fed Ends Bond Buying, Shows Confidence in U.S. Recovery,” Reuters (Oct. 29, 2014); and “Fed’s $4 Trillion Holdings to Boost Growth Beyond End of QE,” Bloomberg (Oct. 24, 2014)
Posted on: Thu, 30 Oct 2014 18:43:52 +0000
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