Janet Yellen Making Smart Moves to Boost U.S. Economy

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CF Funding comments on Fed Chair Janet Yellen's testimony last week about the US economy.

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Taper will continue in 2014, which will cause interest rates to rise but will also stabilize economic growth.

Last Tuesday, Janet Yellen spoke to the House Financial services committee in a testimony of Federal monetary policy for 2014. Before this testimony, many economists were skeptical about Yellen’s plans as she took over as head of the U.S. central bank. As the first woman to hold this position, she is proving more than capable, or as Rep. Ed Perlmutter said during the testimony, she is following in Bernanke’s footsteps as “very smart, very steady, and not very exciting.”

CF Funding announced Janet Yellen’s position in a January 8th article titled “Changes to the Housing Industry in 2014,” in which the lender warned that the newly filled position will create changes in the tapering of bond purchases and affect interest rates starting February 1st. As Yellen explained in her testimony, the taper will continue in 2014, which will cause interest rates to rise but will also stabilize economic growth. CF Funding assures homebuyers that rates are still relatively low, and applying now rather than later can greatly reduce the cost of your home loan or refinance.

As far as her explanation of why the Federal Reserve was ignoring its 6.5% unemployment threshold to raise interest rates, Yellen stated, “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.”

Time Magazine on Friday, February 14th posted a released titled "Even If Janet Yellen Is Wrong About the Economy, She Is Right About Fed Policy" in which the author believed there are two good reasons for Yellen continuing to taper despite the large unemployment rate. First of all, “Any wavering by the Fed can lead to mispricing of both stocks and bonds and create volatility… [which] happened late last year.” Secondly, the taper helps avoid a bubble, as “a sudden easing of monetary policy now would also cause over-exuberance in the stock market as the anticipation of cheaper capital fuels a buying spree.” CF Funding agrees with these points, and hopes to see the economy continue to improve as the Fed continues to taper in 2014.

If you are looking to purchase a home or refinance before rates increase this year, contact a Loan Specialist at CF Funding Corporation today to see what your options are. Visit http://www.cffunding.com or call (630)328-8900.

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Giorgio U Ferrero
CF Funding
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