Mortgage News
US backtrack on QE will keep interest rates low – economist
Lenders could slash fixed-rate mortgage rates further as a result of the US decision to postpone a reduction in monetary stimulus.
On Wednesday, US Federal Reserve chairman Ben Bernanke (pictured) distanced himself from suggestions he made in the summer that the central bank could soon begin ‘tapering’ quantitative easing.
Berenberg Bank economist Robert Wood said the news offered some respite: “Bernanke’s decision has lowered market expectations on interest rates over the next two to three years in the UK.
“This will over time feed into fixed-rate mortgages.”
Bernanke’s hints in June that he might soon wind down quantitative easing triggered speculation about the prospect of rising interest rates.
However, in a statement published yesterday, the US central bank said it would’await more evidence’ that the recovery could be sustained before taking steps dismantle its $85bn-a-month quantitative easing programme.
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Bernanke told journalists a taper might come ‘possibly later this year’. Previously, he had begun to draw up a timeframe for scaling back the stimulus.