So Federal Reserve Chairman Ben Bernanke gave a speech down at a conference in Richmond being held by the local Federal Reserve bank. His message: our policy is working.
The Fed’s programs to purchase up to $300 billion in longer-term Treasury securities and a combined $1.45 trillion in agency and agency-backed mortgage-backed securities “are having the intended effect,” Bernanke said in prepared remarks to a Federal Reserve Bank of Richmond conference.
Mortgage rates, which Bernanke said didn’t respond much to the Fed’s interest rate cuts, have declined between one and 1.5 percentage points since the MBS purchase plan was first announced last November, he said.
“Over time, lower mortgage rates should help to improve conditions in the housing market, whose persistent weakness has had a major impact on economic and financial conditions more broadly, and will improve the financial condition of some households by facilitating refinancing,” Bernanke said.