#quantitative-easing

#quantitative-easing

Housing, particularly in places with a decent job market, has become increasingly unaffordable in the US. That's partly thanks to quantitative easing during the pandemic, which supercharged housing inflation. The median American home price in January was $418,000, about a 45% increase from $289,000 five years ago, per Redfin data. Wages haven't gone up at the same rate, and housing prices compared to income have reached an all-time high.

Federal Reserve Chair Jerome Powell recently addressed the National Association for Business Economics conference, indicating that the central bank would not intervene in secondary mortgage markets to ease mortgage rates, contrary to some suggestions for boosting homebuyer affordability. The discussion revolved around the Fed's efforts to reduce its significant holdings of securities, notably mortgage-backed securities (MBS), accumulated during the COVID-19 pandemic through quantitative easing measures.

In a report called Fixing the Leak, the IPPR's associate director for economic policy, Carsten Jung, says the Treasury should rein in the costs of QE as public finances are tight. What started as a programme to boost the economy is now a massive drain on taxpayer money, he said. Public money is flowing straight into commercial banks' coffers because of a flawed policy design. While families struggle with rising costs, the government is [in effect] writing multibillion-pound cheques to bank shareholders.