Fed: 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 believes mortgage rates will rise about three-quarters of a percent to about 6 percent, Boston Fed President Eric Rosengren said Saturday.
Fear of a worldwide perception that the U.S. government is simply printing money to use to purchase mortgage-related securities is a big reason the Fed has pulled back, analysts say. If that fear caused a sell-off of U.S. government bonds, it would push borrowing costs substantially higher and derail the economic recovery.
"We are still in uncharted waters," Fed Vice Chairman Donald Kohn said in an unrelated speech Saturday. "We will need to be flexible and adjust as we gain experience."
Source: Reuters News, Pedro Nicolaci da Costa (01/08/2010)
Cynthia Rodriguez
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