Ben Bernanke, Chairman of the Federal Reserve, suggested in testimony to be delivered to Congress, that the Fed is not likely to “sell any of its securities holdings in the near term, at least until after policy tightening has gotten under way and the economy is clearly in a sustainable recovery.”
The recent purchase, by the Fed, of some $1.25 trillion of mortgage-backed securities has resulted in reduced mortgage rates, and a concurrent spike in home sales nationwide. The potential sale of the securities had led economists to conclude that interest rates would be headed upward. There are some fears of inflation among economists, owing to the massive amounts of liquidity.
