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INVESTMENT GOVERNMENT PROPERTY PRESERVATION TECH
Journal
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Journal
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FED: NO
CHANGE IN
INTEREST
RATES UNTIL
ECONOMY
RECOVERS
e Federal Reserve announced that
interest rates will remain at 0% to .25% "until it
is confident" the economy has recovered from
COVID-19 and on track to achieve maximum
employment and price stability.
e Fed also announced over the coming
months that it will increase its holdings of
Treasury securities and agency residential and
commercial mortgage-backed securities "at least
at the current pace" to sustain smooth market
functions.
"e Committee will closely monitor
developments and is prepared to adjust its plans
as appropriate," the Fed said.
According to projections by the Fed, it does
not project for interest rates to rise above 1%
until 2022.
In March, the Fed dropped interest rates to
zero in an emergency measure to combat the
immediate effect of the coronavirus.
First American Financial's Deputy Chief
Economist Odeta Kushi said the Fed is
following through on their commitment to
"do anything it takes for as long as it takes" to
mitigate the impacts of COVID-19, including
policies that impact the mortgage markets.
"e Fed is a gigantic ready-buyer in the
secondary market, generating demand that
increases MBS prices and lowers yield for
investors—this results in lower mortgage rates,"
she said.
George Ratiu, Realtor.com's Senior
Economist, echoed Kushi's statement, saying
the Federal Reserve "remains committed" to
providing liquidity to the financial system and
the economy.
"Maintaining the current pace of mortgage-
backed securities purchases is a welcome sign,
indicating that well-functioning real estate
markets are a priority as we move into the
recovery phase. e current recession was
initiated by a clear decision to close business
activity to ensure the health and safety of
Americans. Providing a bridge across the
shutdown crevasse in the form of financial
liquidity is paramount to regain the trust and
financial ability of buyers and sellers to return
to a functioning housing market," he said.