The Federal Reserve met last week and it made no changes to its large scale asset purchase program. The late spring/early summer experience, where its communications about tapering the program were bungled, drove up interest rates, in expectation that stimulus would be withdrawn in the near future. As markets reacted, the Fed backtracked, and since has held policy steady. The earlier backup in interest rates has affected the housing market, and the government shutdown slowed economic momentum somewhat. Hence, current policy will remain in place a while longer.
This week we review the Fed decision through the first article. In the second article review, we remind readers not to blame the Fed for low long-term interest rates—they are a natural reflection of future expectations. Finally, we review what the National Association of Home Builders is saying about the housing slowdown.
Fed maintains strong stimulus as U.S. growth stumbles. The Federal Reserve made no change to its large scale asset purchase program when it met last Wednesday. The Fed statement indicated “the Committee’s decisions about their pace