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The Fed said will spend $40 billion a month to buy mortgage-backed securities for as long as it deems necessary. It extended a plan to keep short-term rates at record lows through mid-2015. And it said it's ready to take other unconventional steps to boost the economy even after growth has begun to accelerate.
In the past, when QE programs were implemented ostensibly to lower interest rates to spur financing activity - the opposite occurred as interest rates (as measured by the 10-yr yield)rose. This was due to the selling of bonds, which pushed prices lower and yields up, as money rotated into the equity markets reminiscent of the land grab during the 1890's gold rush.
Originally posted by InFriNiTee
Wasn't there already a mortgage bubble that burst in 2008? How do they think homes are going to sell if most people can't afford them? I forsee a crash of mortgage-backed securities coming in the future.
Originally posted by Drew99GT
The most hilarious thing about QE programs is they tend to RAISE interest rates! exactly the opposite of what they intend to do, because money flows into stocks and metals and out of bonds.
Now would probably be a good time to start stacking some metals... Goodbye US dollar.
The dollar dropped against major currencies, and the price of gold shot up about $16 an ounce, roughly 1 percent, to $1,750.
Originally posted by Mkoll
reply to post by Majiq1
I though it was $40bn a month of mortgage backed securities purchases as well as unlimited future intervention?
"If the outlook for the labor market does not improve substantially, the committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability," the Fed said in a statement released after the meeting.