bernanke: When the Fed Cuts, What Happens To Mortgage Rates?
- 10/28/08 10:57 PM
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Let me save you some time and money.
The Fed does not control mortgage rates. Not at all. The Fed can do many things to influence the economy, but one of those things they control is NOT mortgage rates. Influence, yes. Control, no.
Let me explain.
What Does The Fed Control?
Now that I’ve established the Fed doesn’t control mortgage rates, it’s important to realize what the Fed does control.
Fed Funds Rate - This is the rate that banks are charged directly from the Fed for overnight funds. (More at Wikipeida).
bernanke: The Fed Decides To Extend The Discount Window Terms
- 08/11/08 09:52 PM
The Fed announced today (Wednesday, July 30th) that they will be extending their discount window terms.
They will be increasing the now 28 days repay loans to 84 days for banking institutions. The first auction offering these terms is on August 11th.
Just another sign that the goverment is willing to do what it takes to releave as much stress on the financial system as possible!
More found on MarketWatch.com!
In a surprise move, this afternoon (Sunday afternoon)... The Fed announced two changes to the discount rate. The first change, the most surprising one - was an expansion of it's lending to securities dealers for up to six months. The securities will join the banks that the Fed worked directly with before. The second part of the announcement was reducing the discount rate from 3.5% to 3.25%. This cut is said to have part to do with the announcement of JP Morgan Chase & Co's purchase of Bear Stearns. There have been many (4 comments)
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