September 20th, 2013 4:05 PM by Sam Kader MLO130505
The Federal Reserve has decided that the economy is still recovering and will continue its $85 billion a month Quantitative Easing (QE) policy. This decision surprised many at Wall Street and bond markets reacted favorably with lenders lowering mortgage rates across the board. The markets have already factored in that the Fed will announce its tapering off in May by increasing rates of about 1% resulting in tightening of financial conditions observed from May through September. The Fed views that if the tightening is sustained, it could slow the pace of improvement in the economy and the labor market.
The Fed may still begin to reduce asset purchases by the end of the year. The overall consensus from the officials shows that growth is still sluggish for years to come with persistent unemployment and inflation remained tame.