Words may speak louder than actions for Federal Reserve chairman Ben Bernanke when the time comes to outline plans to raise interest rates and shrink the central bank’s balance sheet. Altering a pledge to keep short-term borrowing costs low or articulating plans to begin selling the $1.1trn in mortgage-backed securities it now holds will amount to a tightening of monetary policy because the announcements will send bond yields higher, raising borrowing costs, said Mitch Stapley, chief fixed-income officer at Fifth Third Asset Management in Grand Rapids, Michigan. That means Fed officials may be more likely than traders anticipate to keep the benchmark federal funds target rate near zero through the end of the year, according to former Fed Governor Laurence Meyer.
Fed hinting on mortgage-bond sales brings Bernanke tightening
Most Popular Articles
Latest Articles
Indiana senator explains his inquiries into reverse mortgages
Sen. Mike Braun offered insights into his recent letter to Ginnie Mae and the potential need for more scrutiny of the HECM and HMBS programs.