Thus, now is an especially appropriate time to ask the GSEs to move quickly to raise more capital, which they will need to take advantage of these new securitization and investment opportunities, to provide assistance to the housing markets in times of stress, and to do so in a safe and sound manner.
However, the interest rate path and the point at which reinvestment is to come to an end will evidently depend on prospective inflation developments. Moreover, the Eurosystem’s forward guidance has thus far not focused explicitly on the sequence of the first interest rate hike and the end of reinvestment. If we take the Fed’s sequencing as a blueprint, the interest rate hike comes first.