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.
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]