Everyone has an opinion…

  • January 3, 2014

graph3No economic news was released today, keeping the markets calm through the morning hours. However, there was a plethora of Federal Bankers that took the stage this afternoon to voice their opinion about the state of the economy. Let’s break it down.

• Plosser took the stage first claiming the effects of ultra low interest rates won’t be seen for up to 6 years. He feels the Federal Bank’s balance sheet is still concerning and he feels despite tapering the economy should still continue to grow. This means he wants the Fed to cut the cord and let interest rates and inflation rise. Well, that’s one opinion.

• Lacker was the next to pick up the microphone. He also sees the economy continuing to grow next year. He said the improvement this year was welcome, but too soon to say if it will continue. He sees the Fed cutting bond purchases further at upcoming meetings. Every one is a critic these days.

• The headliner was Ben Bernanke who said this afternoon that while the economic is improving, the recovery remains incomplete. He claims that he and the Federal Bank are still committed to accommodative policy. This means he could still keep interest rates low, which is good news for the mortgage market.

Why does this matter? Economic policy directly affects your mortgage rate. The Federal Bank has been buying bonds to keep interest rates low to fuel the economy. They are the largest buyer of mortgage backed securities and this drives your mortgage rates lower. When they stop buying mortgage bonds at the current pace; interest rates might increase. All the more reason to refinance now at these low rates…but that’s just my opinion.

By Lindsey Fediuk, Quicken Loans Capital Markets Analyst

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