Bernanke Discusses Fed Support for Housing Market
U.S. Federal Reserve Chairman Ben Bernanke said that by simply holding mortgage-backed securities on its books, the Fed will continue to support the housing sector and the wider economy.
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| Federal Reserve Chairman Ben Bernanke. (Bloomberg) |
He added, but, there were lots of uncommon views on how ending the buys could impact long-term rates. “There may not be a significant reaction,” Bernanke told lawmakers.
In a key testimony at the House Financial Services Committee, Bernanke said the Fed would stick to plans to end buying $1.25 trillion in mortgage-backed securities by the end of March. Some economists worry that the end of the buys could lead to higher mortgage rates.
Fed officials believe that holding the mortgage bonds is “going to keep rates down,” Bernanke said.
Bernanke indicated that merely keeping the securities on the Fed’s balance sheet would be sufficient to support the market. Some Fed officials have called for selling the mortgage holdings later this year, but Bernanke has said that no sales are foreseen in the near term.