In mid-July, Federal Reserve Chairman Ben Bernanke attempted to soothe the markets’ fears about home loan rate increases. As a result, Bond prices bounced higher from lows not seen in two years, and Stocks traded at all-time highs. Indeed home loan rates have certainly moved up a little, down a little.
Bernanke also repeated that the Fed Funds Rate, which is the rate at which depository institutions actively trade, would remain low for an extended period. He said that if circumstances warranted, “tapering” could begin later this year and end sometime in mid-2014. And just if you weren’t sure what “Tapering” was, it’s a reduction in the Fed’s purchases of Treasury and Bond assets, in attempts at helping the economy get back on track.
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