Ben Bernacke, Federal Reserve Insights and projections through 2014 of Interest rates & economic data

Jan 25, 2012   //   by Ben Gerritsen   //   Markets  //  Comments Off on Ben Bernacke, Federal Reserve Insights and projections through 2014 of Interest rates & economic data

Comments and notes from Chairman Ben Bernake, Chairman of  of The Federal Reserve on Wednesday, January 25, 2012, 2:15 EST.

Source: Wikipedia

Chairman Ben Bernake has announced that interest rates will be kept low through 2014, longer than economists and investors originally anticipated.  This is due to an economy that is growing at a snails crawl pace.  If they could, they would have the Fed Funds rates at minus (-) 3 percent.  But they can’t, so the Fed Funds rate is at 0%.

The yield curve should look much different than what it is and where it is projected for the next 12 to 24 months due to the growth, spending habits and hiring from corporations.

Are we out of the woods for a nation, not yet.

What does this mean for the housing market?  There is a commitment to keep money flowing to businesses to promote growth, to promote investments into the economy and essentially into the individuals and families of the country.

The projected time frame for the jobless rate to fall to between 6 to 7.5% is in 2014.  This is millions of people that are un-employed.

The good pricing and optomistic outlook of great deals in the mortgage market & housing market will be continued up to another 2 years.

The projections of the pace of the growth of economic growth is to grow moderately in the coming quarters.

The growth is projected to be 2.7% in 2012.

After that, it is projected to grow moderately, 2.8 to 3.2% in 2013

In 2014 at 3.4 to 3.7%  this is where rate hikes should start to kick in.

The unemployment rate will grow only gradually for the next few years.

8.2 to 8.5%, which is a very gradual decline

by the 4th Q of 2014, 2.25 to 7.15%

The prices of oil have flattened and have a downtrend. Consequently, this has subdued prices on the markets and consumer prices.

This will run with prices in conjunction with consumer prices for inflation.

1.4 to 1.8% for 2012

1 1/2 to 2 % for 2014.

These forecasts are subject to change

Core inflation is projected to grow at a moderate rate in 2014.

For the next couple of years, consumer prices and commodities are projected to be at a level pace with a slight increase in pricing.

The Federal Reserve will continue to purchase MBS’s, Mortgage Backed Securities with their profits that are generated.  This will continue to keep mortgage interest rates kept at a low level during the time period that the MBS’s are purchased by the Federal Reserve.

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