Today, the Fed Open Market Committee concluded their two-day meeting with some big news—QE 3. Specifically, the FOMC will buy $40 billion of mortgages per month in an effort to spur the recovery in real estate and keep rates for government agency debt low (until the labor market improves ‘substantially’). Additionally, they lengthened and toughened their ‘zero-rate policy’ language from late-2014 to mid-2015. In addition, they stand ready to do more as needed.
This outcome, as has been the case of the last few meetings, was largely expected. However, up until a few days/weeks ago, it wasn’t as clear as to whether such as drastic step would need to be taken. Last week’s poor jobs report and ongoing spottiness in economic data (particularly in manufacturing) appeared to prompt this decision. Continue reading
