Fed Keeps Rates Low

In order to help the recovery of the housing market, the Federal Reserve kept interest rates at an all time low. The Fed also decided to stop buying mortgaged-back securities. A New York Times article reported;

...The Fed voted to keep its benchmark interest rate unchanged, at nearly zero percent, citing evidence of economic weakness and little sign of inflation.

The Fed’s purchases of mortgage-backed securities, which will total $1.25 trillion and end March 31, have helped hold mortgage rates to near-record lows, and the Fed left open the possibility that the purchases might have to be resumed, particularly if the housing recovery stalls.

The Fed said it would “continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability.”

Whether keeping the interest rates this low for an extended period of time will cause unforeseen problems or instability is uncertain. The Fed is doing what it can to aid the recovery of the housing market and the rest of the economy. With interest rates at the lowest that they could possibly be, they will have to find other ways to provide some stability to the market.