Yellen said after a two-day Fed meeting that rates would rise gradually after the taper is complete, staying lower than normal “for some time” even after the economy strengthens, Reuters reported.
The Fed has kept overnight interest rates near zero since 2008 and in recent years, and has bought billions of dollars per month in Treasury and mortgage bonds to help stimulate the flagging economy.
The bond-buying program, known as quantitative easing, led to historic low rates and an explosion in the refinance market in 2012 and 2013. Mere speculation that the Fed would taper in September led rates to rise by more than a full percentage point over the summer, choking the refi boom and leading to thousands of layoffs in the mortgage units of big banks. The Fed began tapering by modest steps in December.
The Federal Reserve’s multibillion-dollar bond-buying program – which led to historically low mortgage rates – will probably be history by this fall, and the Fed could raise interest rates by next spring, agency head Janet Yellen said.