The Fed Takes Aggressive Steps to Help the Economy

Well, the Federal Reserve fired its guns again today to try and help the struggling U.S. economy. Both Stocks and Treasuries were up sharply following the stronger than expected unanimous decision to cut the Fed Funds and Discount rates by 0.75%. In addition, they also made it quite clear in their policy statement that they are willing to expand the balance sheet to increase liquidity and help spur economic growth.

While the moves are all well and good, perhaps the best thing they did today was note in their statement that the Fed "is ready to buy more mortgage agency debt and mortgage-backed securities if necessary" and that the "Fed funds rate is likely to remain exceptionally low for some time to come." The bottom line in this thinking is that housing led us into this mess and will have to lead us out. Without unfreezing the credit markets and bringing down mortgage interest rates, housing will not begin to fully recover anytime soon. Let's just hope they can bully their way to push the banking and lending industry into more action as we move into the New Year.

Metro Mortgage Company is a federally regulated Mortgage Banker specializing in residential Florida home loans including Conventional, Jumbo and FHA/VA mortgages. Call us today at 888-617-3674.

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