The media reports on the tea-leaf reading going on in Washington DC, and Wall Street messages sent out Tuesday by the Federal Reserve. The Fed affirmed its plan to stop buying mortgage-backed securities, a practice that has helped hold interest rates to their lowest levels in a generation at under 5%. Those purchases, totaling $1.25trn, are expected to wrap up by the end of March. But the Fed left open the possibility that it may begin buying the securities again if the housing “recovery” stalls. The Fed also voted to keep its benchmark interest rate – the one that tends to set a bar for mortgage rates – at nearly 0%. It cited continued worries of economic weakness.
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