Will The Fed Taper Bond Buying?
Federal Reserve Chairman Ben Bernanke is expected to announce today at 2:00 PM during a press conference whether he plans to taper quantitative easing, the $85 billion-a-month mortgage bond purchasing program designed to keep interest rates low to encourage people to borrow and invest.
The announcement will have a huge impact on the housing market. Low interest rates have been a big part of the housing recovery, making home ownership affordable and encouraging more people to buy a home.
If the Fed eases up on the program, interest rates will most likely go up resulting in higher borrowing costs for homes.
For months Bernanke has said that once the job market begins to show signs of improving he would recommend cutting back on the program. Although the unemployment rate fell to 7.3% for August, the economy hasn’t produced as many jobs as expected. So there is a chance the Fed won’t taper the quantitative easing program just yet.
If the Fed announces it will not taper the quantitative easing, then interest rates will likely remain in the 4% range, and will likely go slightly lower before the year ends, since historically they reach their lowest levels of the year during the months of November or December.