Tags: Fed Minutes | fear | Ending | Support | Doom | Fragile | Housing Recovery

Minutes Show Fed Fears Ending Support Will Doom Fragile Housing Recovery

Wednesday, 06 January 2010 04:06 PM EST

Some Federal Reserve officials worried last month that waning government support could snuff out a fragile housing market recovery and a few believed it might be desirable to step up asset purchases.

"Some participants ... noted the risk that improvements in the housing sector might be undercut next year as the Federal Reserve's purchases of (mortgage-backed securities) wind down, the homebuyer tax credits expire, and foreclosures and distress sales continue," minutes of the Fed's Dec. 15-16 policy-setting meeting said.

Labor market weakness remained an important concern for Fed officials, the minutes released on Wednesday showed, with officials saying they expect unemployment to remain high for "quite some time."

Views about policy differed.

Some officials said persistently high unemployment might make it desirable at some point to expand or extend large-scale purchases of assets.

However, one policy-maker said improvements in financial markets and in the economy may warrant scaling back the Fed's purchases and reducing holdings over time.

Fed officials said that in general, the outlook for housing was for gains in activity to continue, although some participants viewed the improvements as "quite tentative."

Mortgage markets could come under pressure when the MBS purchases wind down, some officials worried.

The Fed has committed to buying $1.25 trillion of mortgage-backed securities by the end of March.

The Fed began buying MBS, mortgage agency debt and longer-term Treasury securities after it had cut rates to near zero in December 2008 but wanted to continue to provide a boost to the economy.

A $300 billion program to purchase longer-date Treasurys ended in October.

© 2025 Thomson/Reuters. All rights reserved.


Headline
Some Federal Reserve officials worried last month that waning government support could snuff out a fragile housing market recovery and a few believed it might be desirable to step up asset purchases. Some participants ... noted the risk that improvements in the housing...
Fed Minutes,fear,Ending,Support,Doom,Fragile,Housing Recovery
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2010-06-06
Wednesday, 06 January 2010 04:06 PM
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