Federal Reserve to Stop Buying Mortgage Backed Securities

The Federal Reserve renewed its commitment to keep key interest rates near zero for an “extended period,” but also confirmed that it will stop buying mortgage-backed securities at the end of March.

The Fed, whose regular meeting began Tuesday, said that “housing starts have been flat at depressed levels” and “employers remain reluctant to add to payrolls” as a reason for extending the cap on interest rates.

“The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability,” the Federal Open Market Committee statement said.

Source: Bloomberg, Craig Torres and Scott Lanman (03/16/2010)