Trump's Mortgage Move Sparks "QEx" Debate and Rate Skepticism

Source: CryptoNewsNet Original Title: Trump’s Mortgage Move Sparks “QEx” Debate and Rate Skepticism Original Link: The post discusses the announcement that housing finance agencies will implement an order to purchase mortgage-backed securities worth up to 200 billion dollars. This action has been compared to quantitative easing, with some calling it “QEx.” However, the response from observers has been mixed—less enthusiastic and more surprised.

Questions Over Rate Transmission

Skeptics openly question how this policy would actually drive mortgage rates down. The inflation has already been cooled, and the Federal Reserve has shifted toward a more relaxed stance. Against this backdrop, the mechanism becomes unclear. The core question underlying skepticism is whether buying bonds would be as effective in a market where participants already anticipate a more accommodative policy. Effectiveness may be dampened by market expectations.

What History Suggests

Historically, long-term mortgage rates have been reduced through past QE-type mortgage bond purchases via increased demand and lower yields. Similar interventions have demonstrated measurable rate-reducing effects. However, these effects were most pronounced during periods of financial strain.

Current market conditions differ significantly. Markets are calmer, liquidity is healthier, and financial stress is lower. These factors could constrain the magnitude of any rate relief from such purchases.

There is broader uncertainty about policy transmission. Previously dominant policy tools are experiencing diminishing returns in moving markets decisively. Market participants seek concrete results rather than just policy announcements. Until the actual cost of borrowed money responds to this measure, the discussion may lack conviction.