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Fed's New Plan Focuses On The Housing Market

STEVE INSKEEP, HOST:

The Federal Reserve in this country is embarking on another unconventional program to strengthen the sluggish economic recovery. This time, the Fed is focused on the housing market, as NPR's John Ydstie reports.

JOHN YDSTIE, BYLINE: At the end of their two day meeting yesterday, Fed officials said they intend to buy $40 billion a month of mortgage backed securities to help the struggling housing market.

Fed chairman Ben Bernanke explained the rationale at his post meeting new conference.

BEN BERNANKE: Our mortgage backed securities purchases ought to drive down mortgage rates and put down downward pressure on mortgage rates and create more demand for homes and more refinancing.

YDSTIE: The Fed hopes the boost to the housing will spread through the economy, by lifting home prices, increasing people's wealth and confidence and encouraging spending. That could help businesses and promote hiring.

The Fed also made an unusual commitment to keep the stimulus coming, even after the economy strengthens.

BERNANKE: We're not going to be premature in removing policy accommodation. Even after the economy starts to recover more quickly, even after the unemployment rate begins to move down more decisively, we're not going to rush to begin to tighten policy. We're going to give it some time to make sure the recovery is well established.

YDSTIE: Fed officials also extended the period they expect to keep short-term interest rates low to mid-2015.

John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

John Ydstie has covered the economy, Wall Street, and the Federal Reserve at NPR for nearly three decades. Over the years, NPR has also employed Ydstie's reporting skills to cover major stories like the aftermath of Sept. 11, Hurricane Katrina, the Jack Abramoff lobbying scandal, and the implementation of the Affordable Care Act. He was a lead reporter in NPR's coverage of the global financial crisis and the Great Recession, as well as the network's coverage of President Trump's economic policies. Ydstie has also been a guest host on the NPR news programs Morning Edition, All Things Considered, and Weekend Edition. Ydstie stepped back from full-time reporting in late 2018, but plans to continue to contribute to NPR through part-time assignments and work on special projects.