Fed’s Yellen backs holding rates near zero to 2016
BERKELEY, California (Reuters) – Federal Reserve Vice Chair Janet Yellen said on Tuesday that U.S. short-term interest rates may need to stay near zero until early 2016, a half year longer than Wall Street dealers expect, to forcefully lift employment.
The central bank’s No. 2 official, viewed as a front-runner to succeed Fed Chairman Ben Bernanke when his term expires in January 2014, also said she strongly backed adopting inflation and unemployment thresholds to guide future policy.
That would allow the Fed to move away from shaping financial market expectations with calendar dates. After its last meeting in October, the Fed reiterated that it expected to keep the overnight federal funds rate near zero until at least mid-2015.
Yellen, however, argued an optimal policy would keep rates on hold for longer at the cost of a bit more inflation.
Keep in mind that she’s 66 yo and overweight. Time for everyone to send her some Twinkies. For her health, of course.
This being said, inventory outside of NYC is doing just fine right now. It should eventually dip because of homes destroyed in Sandy, but it will take 6+ months for people to get back on their feet and think about buying replacement homes.
Meanwhile, I’m ready, wiling and able to buy this winter.
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