Federal Reserve Chairman Ben Bernanke pledged last week to continue the bond-buying responsible for record low interest rates, a move that could see interest rates hover at around the 4 percent mark until early next year. Demand for properties fell after Bernanke’s remarks in May that the stimulus program would begin to wind down, but the latest announcement could reverse that trend.
“It’s clear the Fed became concerned about housing over the last month, and that’s why it came out so firmly on the side of bond-buying,” Diane Swonk, chief economist at Chicago-based Mesirow Financial, told Bloomberg News. “After months of talking about ending the program, the statement was crystal clear it would continue, open-ended.”
Though the announcement ends months of uncertainty in the market, it’s clear that the gravy train won’t go on forever.
“‘Open ended’ does not mean unending,” Federal Reserve Board Governor Jerome Powell said in a speech last month, according to Bloomberg News. [Bloomberg News] – Hiten Samtani