Comments earlier this week from some folks at the Fed made it sound like the Fed was planning to get out of the business of compressing mortgage interest rates in the next few months. That would possible result in mortgage rates moving toward 7% next year. Well today a Fed official essentially said “Not so fast”. See this from a MarketWatch report:
It is too early to contemplate an end to the Federal Reserve’s unconventional easing strategy, said William Dudley, president of the New York Federal Reserve Bank, in a television interview Monday. “My own personal view is, I think it’s a little premature to be so confident that you want to pull all these things back right now,” Dudley said in a CNBC interview. Julia Coronado, an analyst with BNP Paribas, said Dudley appeared to be trying to throw cold water on comments from two other regional Fed presidents last week that the central bank may not purchase as many mortgage bonds as planned because the economy is leveling out. Dudley said he was not worried about the Fed’s monetary policy strategy causing inflation.