The Federal Reserve’s $1.25 trillion mortgage-backed security buying program is slated to end on March 31st.
But Federal Reserve president William Dudley just made it clear that it would likely be restarted if the mortgage market started showing signs of weakness whereby mortgage rates rose too much.
A screaming invitation to Housing Bubble 2.0 punters:
In interviews with the Nightly Business Report and the Associated Press, Dudley said the time is right to end the program because the economy is growing and because expanding the purchases would make it harder for the Fed to unwind its support down the road.
But he said the Fed might reconsider if rates rose sharply. “Obviously, if mortgage rates were to back up a lot and if that had a big consequence for the economy, then we very well could rethink the issue about whether we wanted to buy more mortgages,” Dudley told the Nightly Business Report.
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