Fed stirs controversy after his recent dramatic bizarre response to the coronavirus
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| Andrew Harrer | Bloomberg | Getty Images |
Fed cuts interest rate to near-zero, moves to prop up mortgage market
Mortgage rates are fall again after the Federal Reserve’s latest dramatic policy moves to combat the economic impact from the deadly coronavirus pandemic.In the most drastic actions since the 2008 financial crisis, the Federal Reserve Sunday afternoon announced it cuts interest rate to near-zero, moves to prop up mortgage market, and said it will begin buying $200 billion of mortgage-backed bonds, a move that will stabilize and likely lower mortgage rates, which moved sharply higher last week.
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Mortgage rates had fallen to a record low two weeks ago, an investors in mortgage-backed bonds to back off. That, in turn, caused mortgage rates to jump more than 50 basis points in one day and hit their January high by the end of last week.
Powell said that he expects economic activity to be weak in the second quarter, and that the Fed is “willing to be patient” and hold interest rates at zero until “we’re confident the economy has weathered recent events.”
Alan Rosenbaum, CEO of mortgage lender GuardHill Financial, said the interest rate cut and the injection of liquidity were good signs that the Fed was ready to help support the economy.
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