US Federal Reserve FOMC

QE3 Ends In October

US Quantitative Easing 3 Ends In October

By now you would have known the outcome of September’s FOMC meeting last week with Janet Yellen confirming that QE3 is ending with final purchase of US$15b of bonds next month.  What’s next?

The official statement released was that “rates would remain extraordinarily low for a considerable time” and “although US economic expansion has continued since the last FOMC meeting in July there is still lingering concerns on the underutilisation of labour”.

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At MortgageWise, we interpret the latest Fed statement to be mostly ambivalent, inconclusive and in fact almost a non-event as what they are basically saying is there is no change in policy since the last meeting, and whether rate hikes will happen sooner or later part of 2015 depends on how the market reacts after tapering ends next month.  Everyone knows that.

The only indication that Fed may now be more hawkish (or leaning towards rate hike) this round was the revision of the Board’s own forecast of the Fed funds rate by end of 2015 to 1.375% instead of the earlier 1.125% forecast in June.

Going by the latest inflation data in August where the CPI actually fall for the first time this year, understandably we think Fed is not in any hurry to hike rates which carries a greater risk of sabotaging the recovery than to maintain the current “wait-and-see” policy for a while longer.

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Remember that European central bank is starting on their QE next month as well.  And together with Japan which continues to flood the market with cheap money, it is hard to tell which way it will go.

Many still believe that the current recession in EU will have an effect on US recovery and the picture will become clearer in the coming months.

We maintain our view that interest rate hike is more likely to happen in 2nd half of 2015 given all the uncertainties.


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About Darren Goh

Darren Goh is the Executive Director of, a thought leader in the Singapore mortgage industry, with frequent interviews and quotes by the press - Business Times, Straits Times, Zaobao and EdgeProperty for his views on the latest mortgage trends. He is an avid property investor with careers in banking & real estate before becoming an entrepreneur.
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