Reliable Rates

Reliable Rates With tapering of the Fed’s monthly purchases of $80 billion in Treasuries and $40 billion in mortgage-backed securities fast approaching, will this raise interest rates? Unlikely, and the primary reason is the federal budget deficit, which was $3.1 trillion in 2020, and will probably be of similar size in 2021, will shrink to $1.5 trillion in 2022. This dramatic supply reduction should more than offset the Fed’s reduced demand.