08 Nov Fed Tapering Starts Now, Markets Unfazed
November 3, 2021
The Federal Reserve this month will begin tapering the support it’s provided to mortgage rates during the pandemic, reducing its $120 billion in monthly purchases of mortgages and government debt over eight months.
Because the Fed has been broadcasting its intentions for months, mortgage rates aren’t expected to jump right away, as markets have already priced in the Fed’s tapering plans. But forecasters do expect a gradual rise in mortgage rates next year, as the Fed stops growing its mortgage holdings.
The timetable for tapering announced today fits a scenario discussed at the Federal Open Market Committee’s September meeting, and revealed publicly last month with publication of the meeting’s minutes.
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