Fed Fund Rate to Remain Low Despite Declining Unemployment

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Peoples Home Equity comments on Janet Yellen's testimony yesterday.

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Peoples Home Equity was not surprised to see mortgage rates continue their rise yesterday

Fed Chair Janet Yellen spoke yesterday, February 11th, in front of the House Financial Services Committee. Yellen gave an affirming testimony relating to the Federal Reserve’s intentions of keep interest rates near zero percent for an additional period of time. This news was surprising for Peoples Home Equity given the Feds rhetoric over the past year has been spoken with the intent of raising interest rates when unemployment reaches a certain percentage (6.5%). However, Peoples Home Equity was not surprised to see mortgage rates rise in yesterday’s trading.

Janet Yellen covered a series of important topics that could be influential for the housing market. However, for Peoples Home Equity, its key interest related to interest rates. America learned that the Federal Reserve is still very concerned about the economy and intends to leave interest rates low even longer. According to MarketWire report on January 11th, Fed Chair Yellen responded with the following quote when asked by congressman Jeb Hensarling as to why the Federal was ignoring its 6.5% unemployment threshold to raise interest rates; “Congressman, I believe that I am a sensible central banker and these are very unusual times in which monetary policy for quite a long time has not even been able to do what a rule like the Taylor rule would have prescribed. For several years, that rule would have prescribed that the federal funds rate should be in negative territory, which is impossible.” Chair Yellen was pushing the idea to congress that had the Federal Reserve followed the economic theory of John B. Taylor during the economic recovery, then negative interest rates would have been installed. However, this would have been impossible since Americans would not pay interest to keep their money in a Federal bank account.

Peoples Home Equity was not surprised to see mortgage rates continue their rise yesterday. The lender mentioned in a pre-testimony news release on January 10th titled “Fed Chair Yellen Testimony Coming Soon” that it thought mortgage rates would rise even if Federal Reserve issued “statements saying they intend to keep interest rates low for an extended period of time.”

Please contact Peoples Home Equity loan officer today for mortgage details at: (855)-897-0300.

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Giorgio U Ferrero
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