The Fed is Letting Off the Brakes of Quantitative Easing

The economy is starting to pick back up again and is causing the Federal Reserve to scale back their policy of quantitative easing. This was one of many strategies they employed in order to help mitigate the damage from the recession that began in 2007 and continued through 2009.

Be sure to keep an eye on your debts and obligations as the 

Fed begins quantitative easing.

Under this program, the Fed purchased government bonds each month that totaled billions of dollars. This brought liquidity to the economy and kept interest rates low, while encouraging investments from both consumers and businesses. The strategy was effective, but it wasn’t a long-term solution. Instead, it raised the national debt.

To remedy this effect, the Fed is considering a gradual tapering of their quantitative easing program. As their confidence in the economy grows, the government can begin selling these bonds on the open market without triggering inflation or causing the economy to stagnate.

However, there is a risk that potential home buyers should be aware of. As the Fed begins selling these bonds to private investors, it’s possible that it could trigger interest rate increases. For now, the government is holding onto these bonds, but they’re keeping their options open and may begin selling them as early as the second quarter of 2015.

If and when the Fed makes these bonds available on the open market, it will impact personal finance rates on everything from car loans to mortgages. Right now, with over $4 trillion in credit, you can bet that selling these bonds will involve a delicate balancing act between generating profits, freeing up capital and keeping interest rates from ballooning and triggering another recession.

For these reasons, we strongly suggest you get your finances in order as soon as possible. Doing so now can help you secure the best interest rates on your loans and help mitigate any potential rate increases that would impact your personal finance goals. Whether you have a mortgage, an auto loan, student loans, or a stack of medical bills, rate increases could occur across the board.

As always, Superior Debt Relief Services is happy to answer your questions regarding quantitative easing and the ways we can help you get your finances back on a solid footing.