Fed signals it's ready to go either way with mortgage buys

The Federal Reserve Open Market Committee today affirmed that it will continue its $85-billion-per-month “quantitative easing” program, which includes $40 billion in monthly purchases of mortgage backed securities (MBS) that have helped keep mortgage rates low. The move was expected, given that unemployment remains stubbornly high and inflation seems like a distant concern. In fact, while some FOMC members have hinted that they’re anxious to scale back or discontinue  “QE3” purchases, there are also those who think the Fed may need to boost its stimulus efforts if the economy takes a turn for the worse. University of Oregon economist Mark Thoma notes in a Moneywatch column that the FOMC today left the door open for action in either direction, promising that it’s “prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.”  Thoma thinks FOMC members would prefer to “change expectations with talk rather than action” and that, for the time being at least, we may hear less talk about winding down QE3.  Source: cbsnews.com.