Barrons.com
The Housing Market Is on Fire. The Fed Is Stoking the Flames.
Throughout the saga, the Fed has provided tanker cars of liquidity, by slashing its short-term interest rate target to near zero and by buying $120 billion of securities per month since the spring of 2020 to counter the pandemic’s economic impact. The rapid, aggressive response by the monetary and fiscal authorities, which included the passage of the $2.2 trillion Cares Act, resulted in the shortest recession on record, starting in February 2020 and ending just two months later, the National Bureau of Economic Research, the arbiter of such matters, announced this past week. As the Federal Open Market Committee meets this coming week to plot near-term policy, the bond-buying surely will be a key topic, as Fed Chairman Jerome Powell indicated in his congressional testimony on July 15.
