As a result of all of the analysis Dr Seifried presented at this year's Star Financial Economic Forum, he predicted that mortgage rates may even go lower in the next year. His prediction was that 30 year mortgages could drop to 3%. Part of the problem facing the U. S. economy is a natural result...
Yesterday, I wrote about what Dr. Seifried, Economist called the “7 Deadly Sins” affecting the US Economy and how he believes things will improve.
Dr. Seifried analyzed the remarks from the Federal Open Market Committee (FOMC) meetings. At the August 9, 2011 meeting the committee said they would keep the Fed rate at 0 until 2013 which was completely unprecedented. Never before had they predicted they would need to keep rates low for so long. There were 3 dissenters from that opinion who felt that was too long. Dr. Seifred called this the “zero rate promise.” Then at the September 20, 2011 meeting the FOMC decided on a course of action Seifried called “operation twist”. Their action would invert the yield curve which they projected to cause GDP to increase by .4% and add 350,000 jobs. Again 3 people dissented, not wanting to interfere with the natural course of the economy. On November 1-2, however, when the FOMC decided to maintain their course, and there was only one dissension and that was because one member wanted them to be more aggressive.
As a result, Dr. Seifried believes that at the December meeting there are 3 possible outcomes. The FOMC could decide to remove the interest paid by the Central Bank on reserves which would cause banks to seek other investments or they could specify a particular inflation or unemployment level at which they would begin to raise rates or worst of all in his opinion, they could implement QE3.
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