Long Period of Low Interest Rates

Here is an interesting article, originally published in the NY Times, about current and future interest rates.

This is a great time to investigate purchasing your first home, or moving up! Our current interest rates are at an historical low, and likely to remain so for some time to come.

We have pulled the first part of the article for you to peruse, and you can read the whole article by clinking on the link at the bottom of the post.

Bernanke Forecasts Long Period of Low Interest Rates

By SEWELL CHAN
Published: February 24, 2010

WASHINGTON — Ben S. Bernanke, making his first appearance before Congress since the Senate confirmed him last month to a second term as chairman of the Federal Reserve, reaffirmed on Wednesday that short-term interest rates would remain historically low — near zero — for “an extended period.”

In presenting the Fed’s semiannual monetary report to Congress, Mr. Bernanke did not waver from the Jan. 27 statement of the central bank’s key policy making board, or from a Feb. 10 statement in which he explained to Congress the strategies for gradually reducing the vast sums that banks hold in reserves at the Fed.

“Although the federal funds rate is likely to remain exceptionally low for an extended period, as the expansion matures, the Federal Reserve will at some point need to begin to tighten monetary conditions to prevent the development of inflationary pressures,” Mr. Bernanke said in a prepared statement.

Mr. Bernanke predicted that the economic recovery would remain slow. Much of the pickup in growth late last year, he said, could be attributed to companies reducing unwanted inventories of unsold goods, making them more willing to bolster production.

“As the impetus provided by the inventory cycle is temporary, and as the fiscal support for economic growth likely will diminish later this year, a sustained recovery will depend on continued growth in private-sector final demand for goods and services,” he said.

Mr.. Bernanke’s prepared testimony, which accompanied the Fed’s 53-page monetary policy report, did not contain many surprises. Observers were more interested in what he would tell members of the House Financial Services Committee under questioning.

In his testimony, Mr. Bernanke said consumer demand seemed to be “growing at a moderate pace,” notably business investment in equipment and software and in a rebound of international trade. Housing starts, however, have been flat, and despite recent signs that job losses have slowed, the “job market remains quite weak.”

http://www.nytimes.com/2010/02/25/business/economy/25fed.html