The Fed has taken Historic Action and has established a Target Range vs. a Flat Rate.
Target range for the federal funds rate of 0 to 1/4 percent.
(This should be interesting for Prime? Credit and Money is NOW Cheep. Didn’t we do this in 2001-2003?)
Given the overall decline in the U.S. Economy, the FED announced that it is determined to use every tool possible to pull the economy out of the current recession. The FED is sticking to its guns and will continue to purchase Government debt and MBS as one of the Monetary Policy Tools.
“over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant.”
As we speak 1:45 p.m. pacific time MBS reacting favorable to the announcement. Although lenders have been slow to re price for the better, we will most likely see impressive rates tomorrow.
As always thinking of Refinancing or Purchasing feel free to contact me for your No Obligation Mortgage Plan.
Parsing the Fed Statement
The Wall Street Journal Online
December 16, 2008
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