federal reserve

Fed didn't taper; effect on your finances

How 'no taper' affects your money
How 'no taper' affects your money © isak55/Shutterstock.com

If you're getting ready to get a mortgage soon, you'll be pleased by the Federal Reserve's decision to keep buying $85 billion a month in bonds. If you're a saver, then you'll see more of the same low yields.

And if you're about to buy a car or charge up your credit cards, the Fed won't move those interest rates for a while.

Since November 2008, the Fed has embarked on three rounds of quantitative easing, in which the central bank buys bonds of various types to reduce long-term interest rates and keep them low. The goal is to encourage businesses and consumers to borrow and spend, thus spurring the economy.

The current round of quantitative easing, dubbed QE3 because it's the third, began a year ago, when the Fed pledged to buy $85 billion a month in bonds: $45 billion in Treasuries and $40 billion in mortgage-backed securities.

There had been speculation that the Fed would cut back on the bond purchases at its September meeting. But the Fed said it won't reduce the pace of bond purchases until the employment picture improves. Here is how the continuation of QE3 will affect various consumer interest rates.

- By Holden Lewis


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