Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, said the central bank should end its purchases of mortgage debt as planned in March because the private market for the securities is “healing.”
Hoenig said last week’s report showing the economy lost 85,000 jobs in December doesn’t change his outlook for growth of 3 percent to 3.5 percent this year. The central bank should consider raising its target rate for overnight interbank lending from a record low even with unemployment at 10 percent, he said.
The ugly reality of the market is that the real estate industry has been being subsidized for the past year with lower interest rates and tax incentives to keep from imploding. Now we are looking at these subsidies going away because they are too expensive for the government to continue.
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