(NEW YORK) -- Members of the Federal Reserve are split on whether to keep stimulating the economy until the end of 2013, according to minutes from a Fed meeting released Thursday afternoon. Some members of the Fed believe that QE3 measures to boost the U.S. economy should be pulled back before the end of the year.
Economist Diane Swonk says that it's important for the Fed to get on record that there is some debate, but she thinks that QE3 measures will last until 2013 if not well into 2014, unless the unemployment rate gets to or below 7 percent. The current unemployment rate is 7.7 percent, with new data due Friday morning.
In a previous announcement the Fed said that it expects to keep interest rates low until unemployment falls below 6.5 percent. This was the first time in its history that the Fed set specific targets for its monetary policy.
Now the Fed is making public debate about how long QE3 will last. It said it will continue QE3 until there is a substantial improvement in the labor market without defining what substantial improvement means.
So what does QE3 mean for you?
- Your 401K will fare well because this move likely boosts stock prices.
- Home Mortgages: Rock-bottom rates will likely last for the foreseeable future. So this is a great time to buy if you can get a loan. Buying mortgage-backed securities may end up encouraging banks to give out more home loans.
The markets moved a bit lower on the release of the Fed's meeting minutes, but have since recovered some of their loses. The Dow closed down 21 points, while the S&P and Nasdaq lost three and 11 points, respectively.
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