Shutdown likely put the kibosh on October tapering

The Federal Reserve is unlikely to begin tapering its $85 billion-a-month purchases of Treasurys and mortgage-backed securities at its meeting this month because it won’t have the data it needs to decide whether tapering is warranted, the Wall Street Journal reports. The government shutdown closed agencies that collect the data.

The real estate industry is keeping a close eye on the timing of the wind-down of the Fed’s “quantitative easing,” which has helped keep mortgage rates extremely low by historical norms. Fed officials could still decide to start tapering in December or January depending on the strength of the economy, particularly employment.

The shutdown probably slowed fourth-quarter economic growth, Calculated Risk’s Bill McBride notes, “and the Fed will want to understand the economic impact of the shutdown before changing course.” Source: Wall Street Journal via calculatedriskblog.com