At the last Fed meeting officials said in a statement that they were prepared to complete their planned purchase of $1.25 trillion of Mortgage Backed Securities. So far the Fed has bought $625 billion and that is what brought mortgage rates down. So with nearly half the allotment yet to go the outlook for mortgage rates had been lower.
Until this news:
"Fed May Not Need to Buy All Authorized MBS, Two Officials Say"
|Richmond Fed President Jeffrey Lacker said yesterday in a speech in Danville, Virginia, that he’ll evaluate “whether we need or want the additional stimulus” from buying the full amount. St. Louis Fed President James Bullard, speaking to reporters in Little Rock, Arkansas, said “it might not be necessary.”|
What brought on the change of heart? Simple...the Fed has under attack from every direction, so they're extremely sensitive to the "inflation" criticism. And they cannot defend themselves (not that Bullard of Lacker would even know how) because most people believe the, "Fed is fostering inflation," story.