While testifying before the House Financial Services Committee on Wednesday, Federal Reserve Chair Janet Yellen noted that persistent economic headwinds have kept the federal funds target rate at a historically low level—and that future rate hikes may occur even more gradually than originally anticipated. Those headwinds include limited access to credit for some borrowers, weak growth abroad, and the dollar’s significant appreciation. Inflation also remains way below the Fed’s 2 percent objective.
Yellen said in her testimony, quote, the Committee expects that the federal funds rate is likely to remain, for some time, below the levels that are expected to prevail in the longer run. This expectation is consistent with the view that the neutral nominal federal funds rate—defined as the value of the federal funds rate that would be neither expansionary nor contractionary if the economy was operating near potential—is currently low by historical standards and is likely to rise only gradually over time. Close quote
Fannie Mae announced the winners in its latest non-performing loan auction on Wednesday. The NPL sale, which was Fannie Mae’s largest ever, included approximately 6 thousand 500 deeply delinquent residential mortgage loans totaling 1 point 32 billion dollars in aggregate unpaid principal balance. The loans included were an average of close to six years delinquent. The loans were auctioned in four pools, with the winners being Canyon Partners and Pretium Mortgage for one pool each and Goldman Sachs for two pools.