Fed Tightens Monetary Policy for 2016

January 14, 2016

In December, the Federal Reserve raised the federal funds rate, which led to tightening the monetary policy.

While the housing market got stronger and sales and home prices increased last year, economists are trying to predict what the impact of the raised rate will be. 

Freddie Mac’s chief economist Sean Becketti has four reasons as to why his company doesn’t think the monetary tightening will lead to higher mortgage rates or reduced affordability in housing. Among them, “Weakness in the global economy and the stronger dollar will attract global capital flows to Treasury securities, further limiting any increase in longer-term U.S. interest rates,” he writes.

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