With the economy on the mend, the Federal Reserve says it is slowing the pace of a program to lower mortgage rates and prop up the housing market. The Fed decided to stretch out its goal of buying $1.45 trillion in mortgage-backed securities and debt issued by Fannie Mae, Freddie Mac and Fannie Mae until the end of the first quarter of 2010. Originally, the central bank intended to complete buying those securities by the end of this year. It marked the second time since August that the Fed has opted to slow some of its extraordinary support to revive the economy and spur Americans to boost spending. It shows that the Fed Chairman Ben Bernanke and his colleagues are confident the recovery will take hold.
In a more upbeat assessment, the Fed says: “Economic activity has picked up following its severe downturn.” When the Fed last met in August, policymakers declared that economic activity was “leveling out.” The central bank says it “expects that inflation will remain subdued for some time.”
To foster the recovery, the Fed decided to hold a key bank lending rate at a record low near zero, and again pledged to keep rates there “for an extended period.” Economists predict that means through the rest of this year, and perhaps into part of next year.
