The S&P / Case Shiller House Price Index showed a gain of over 1% in house prices in the 20 biggest US cities in September. Year over year, this is a gain of 13.3%, above 13% expected. Even if the result were to come below expectations, a rise of over 10% in housing prices, and for the 7th time in a row, shows that prices of homes are consistently rising. One of the drivers of housing prices is the low interest rates, including the long term ones which the Fed depresses via its QE program. Is it time to taper bond buys in order to prevent another bubble? Housing and the economy The Fed has two mandates: inflation and unemployment. It isn’t meeting its targets, especially as unemployment is high. Also inflation isn’t exactly an issue. However, the Fed also has some responsibility to maintain stability in the financial system, especially in the aftermath of the global financial crisis. Housing is a significant driver of growth: with every new house built, infrastructure is also built and services are consumed. An active second hand housing market also results in expenditure on furniture, transaction fees, etc. There is a strong correlation between the housing sector and the greater economy. Yet this correlation works both ways: when the housing sector overheats, it can collapse, and when it collapses, everybody suffers. Dectaper Bernanke has two more FOMC decisions left. The last one is on January 29th, just two days before he steps down and he isn’t likely to lead any last minute move. So, the decision in December is the critical one where he can defend his legacy. The Fed has recently been able to separate the concept of QE tapering from short term interest rates, meaning that less bond buying doesn’t trigger expectations of an imminent rate hike in the Federal Funds Rate, something the central bank was unable to do earlier. The strong figure from Case Shiller joins better than expected building permits numbers for September and October. A “Dectaper” – QE tapering in December is now closer than earlier perceived. The only missing piece in the puzzle is the all-important Non-Farm Payrolls report for November, due on December 6th. It is now safer to say that a figure of over 200K job gains in November will lead the way to a decision on QE tapering on December 18th. What do you think? How close is the Fed to tapering? Yohay Elam Yohay Elam Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay's Google Profile View All Post By Yohay Elam Opinions share Read Next BOJ inflation goal at risk Scott Smith 9 years The S&P / Case Shiller House Price Index showed a gain of over 1% in house prices in the 20 biggest US cities in September. Year over year, this is a gain of 13.3%, above 13% expected. Even if the result were to come below expectations, a rise of over 10% in housing prices, and for the 7th time in a row, shows that prices of homes are consistently rising. One of the drivers of housing prices is the low interest rates, including the long term ones which the Fed depresses via its QE program. Is it time to taper… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk.4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk.5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.