Bernanke to Continue Monetary Policy
Federal Reserve Chairman Ben Bernanke will continue to support the country’s economic recovery by maintaining the pace of the agency’s asset purchases, HousingWire reported May 22.
While the Federal Open Market Committee has indicated it is prepared to increase or reduce the pace of asset purchases as the outlook for the labor market changes or as inflation fluctuates, Bernanke said that any reduction in the pace of quantitative easing — the Fed’s monthly purchase of $85 billion in Treasury bonds and mortgage-backed securities — would be premature until the Fed sees strong signs of solid financial stability.
“A premature tightening of monetary policy could lead interest rates to rise temporarily but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further,” Bernanke said, HousingWire reported.
Thanks to lower interest rates, the housing market has seen some recovery over the last year, which has, in turn, fostered job creation in real estate and construction, and in the home furnishing sector. HousingWire reported that higher home prices also have propped up household finances and improved consumer consumption.