The Fed has finally responded to the soaring mortgage rates, and the apparent failure of quantitative easing.
Their spin — courtesy of CNBC’s Steve Liesman (natch) — is that the Fed was never trying to force down mortgage rates or “set” rates. Rather, by stepping in and purchasing bonds, the Fed is merely trying to “support” the credit markets.
Frankly, we’re not sure that there’s a difference between the two statements. “Supporting” credit markets is another way of making sure that interest rates aren’t getting out of hand. And to the extent that the credit markets need that Fed support is not very promising.
Either way it seems clear. The Fed believes that depressing rates is how they’ll stabilise the housing market and the sudden spike up torpedoes that goal.