What’s in Store for the Federal Reserve?
On February 1, Janet L. Yellen took over as the leader of the Fed. Yellen is the first woman to head up the Fed in its one hundred year history, so this clearly signifies a change in the attitude and goals for the upcoming year. Yellen’s biggest goal is to redefine how the Fed will use the federal funds’ rate to shape the economy over the next few years.
She has her work cut out for her, given the Fed’s $4 trillion balance sheet.
Jan 29 the Fed announced that it will be tapering off the billion dollars bond-buying program known as Quantitative Easing, which proves to be one of Yellen’s biggest concerns.
The tapering will need to be done in a smooth manner so as to gradually ease the economy back into a state of healthy living.
Tapering is likely to eventually result in a rise in mortgage interest rates, which is why you will commonly see us and other mortgage and real estate professionals encouraging fence-sitting home shoppers to buy now. Once rates go up, it’s unlikely they’ll get as low as they are currently.
Overall, the Fed is looking towards the future and is hoping to get the U.S. economy back on track to where it was before the housing crisis.