Could This Monthâ€™s Fed Meeting Reveal a Third Round of Purchases?
As the Fed continues their meeting tomorrow, many speculate if the Fed may announce a third round of purchases geared towards helping Obama’s new refinance efforts. Earlier in October, Fed Vice Chairman Janet Yellen mentioned that a third round of large-scale asset purchases “might become appropriate if the evolving economic conditions called for significantly greater monetary accommodation”. And with better-than-expected economic reports leading up to this month’s meeting, the Fed may look into options to further develop monetary ease.
Not wanting to see mortgage interest rates rise too much, the Fed may do more to hold down borrowing costs, such as commit as much as $500 billion towards purchasing mortgage debt. A move like this would assure that in the next six months there would be a significant stimulus from the mortgage market into the housing market.