Federal Reserve Chair Ben Bernanke defended his comments about the housing market and the central bank’s decision to hold interest rates at lows until 2014 in testimony Thursday to the House Budget Committee.
Some lawmakers on Thursday questioned the Fed’s move to keep rates low for three more years, saying it brings a risk to higher inflation and stymies economic growth.
Recently, the Fed announced that it doesn’t plan to raise its benchmark interest rates from a record low until late 2014, a move that will likely keep mortgage rates at record lows as well.
Bernanke says that while the economy is showing improvement, the pace has been slow and many threats remain to economic recovery, such as European’s debt crisis, the nation’s rising debt, and the still-ailing housing market.
Bernanke said he feels the sluggish housing market is holding back overall economic growth.
National Association of Realtors® President Moe Veissi says that while the housing market has shown signs of stabilizing, lawmakers need to make housing needs more of a top priority.
“We fully support Chairman Bernanke’s comments that the lack of available and affordable mortgage financing, low home values, and high foreclosure inventories are inhibiting a meaningful housing market recovery,” Veissi said in a statement. “We believe more can be done to address the lack of available and affordable mortgage financing to creditworthy borrowers and stem the rising inventory of foreclosed homes, which is depressing home values in communities across the country. Housing and home ownership issues affect all Americans, and stabilizing the housing market is critical to the nation’s economy making a meaningful recovery.”
Source: “Bernanke Urges Caution in Overly Rapid Deficit Cutting,” Associated Press (Feb. 2, 2012) and the National Association of REALTORS®
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