New-Home Sales At Record Low In Jan.; Bernanke Soothes

Bernanke spoke to a House panel as the Commerce Department reported new-home sales sank 11.2% to an annualized 309,000, the lowest since records began in 1963. Analysts expected a small gain to 354,000. That stepped up fears that the housing and broader economic revival could stall as the government and Fed end support.

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The central bank last week unnerved investors by raising its largely symbolic discount rate on loans to banks. But Bernanke stressed an ultra-low benchmark fed funds rate is still needed to aid a “nascent” recovery.

“He relieved a little apprehension that the punch bowl is going to leave the party ,” said James Grefenstette, a senior portfolio manager at Federated Investors.

The Fed has kept the fed funds rate at a record low near 0% and is purchasing over $1 trillion in mortgage securities to bolster housing. But it plans to end those buys in March and has started to wind down other lending programs. [Read the full article]

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