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Current News & Events Mortgage Information

Fed Officials Debate Scaling Back Mortgage-Bond Purchases at Faster Clip

By Third PartyJune 30, 2021

Jerome Powell (Al Drago/The New York Times via AP, Pool, File) — FILE - In this Dec. 1, 2020, file photo, Federal Reserve Chair Jerome Powell listens during a Senate Banking Committee hearing on Capitol Hill in Washington. During an interview broadcast Sunday, April 11, 2021, on CBS' "60 Minutes," Powell said the U.S. economy is poised for an extended period of strong growth and hiring, though the coronavirus still poses some risk. (Al Drago/The New York Times via AP, Pool, File)

Source: The Wall Street Journal —

As Federal Reserve officials discuss how to eventually scale back their easy-money policies, they are debating whether to start by reducing purchases of mortgage-backed securities to avoid adding more fuel to the housing boom.

The Fed has bought $982 billion of the mortgage bonds since March 5, 2020, and currently plans to keep buying at least $40 billion each month. Those purchases, along with the Fed’s monthly purchases of $80 billion of Treasury debt, aim to hold down long-term borrowing costs to stimulate the economy as it recovers from the effects of the pandemic.