STOCK MARKET WATCH - Thursday, 26 January 2012

[Ghost Dog]

104. Mortgage bonds key to US recovery

New York: US Federal Reserve policy makers will probably buy mortgage bonds should the economy warrant more easing, with purchases of all debt totalling $500 billion (Dh1.83 trillion), according to economists in a Bloomberg News survey...


... Fed chairman Ben S. Bernanke said in a January 4 letter to Congress that housing is "blunting" the impact from interest rates near zero and impeding economic growth. By purchasing more mortgage bonds, Bernanke would aim to cut the cost of home loans, spurring refinancing and sales of residential properties.

"Housing has been a critical piece of prior recoveries, and the US economy is not likely to achieve sustained above trend growth without the participation of housing," said Julia Coronado, chief economist for North America at BNP Paribas in New York.

Easing debate

Economists are split on whether the Fed will buy more assets, with half saying they don't expect a third round of so-called quantitative easing at any time. Last month, 51 per cent of surveyed economists predicted the Fed won't engage in more purchases.

/... http://gulfnews.com/business/property/international/mortgage-bonds-key-to-us-recovery-1.971759