As the Federal Reserve Open Market Committee met today, they warned that the modest growth of last quarter is not an indicator of a larger trend.

Essentially hedging their bets, the FOMC declared that they would, as a last resort, buy mortgage backed securities. The AP writer Martin Crutsinger wrote:

Should the U.S. economy worsen, the Fed could take bolder steps, such as buying more mortgage securities. Doing so could help push down mortgage rates and help boost home purchases. The weak housing market has been slowing the broader economy.

All due respect to the Federal Reserve, but I sincerely doubt mortgage rates could go any lower. Low rates are of course important towards sustained growth in the housing sector, but the Fed forgets that demand is simply not present at this point in time. Consumer confidence in home ownership needs to take a fundamental turn before any significant changes can be seen.