Fed acts to bolster US economy

The US central bank has announced it will resume its policy of pumping more money into the economy via so-called quantitative easing.

The Federal Reserve said it will buy “additional agency mortgage-backed securities at a pace of $40 billion per month”.

The central bank also said it could increase the size of its purchases if the economy does not improve.

The economy is a pivotal issue in this year’s US presidential election.

 

The US central bank has announced it will resume its policy of pumping more money into the economy via so-called quantitative easing

 

Interest rates in the US have been close to zero for several years now, and the Fed again kept them at below 0.25%.

“The committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions,” said the Fed, led by chairman Ben Bernanke.

US stocks, which had been little changed, gained after the announcement. The benchmark Dow Jones average was 0.7% higher.

The US central bank has tried to support the economy by quantitative easing – buying $2.3 trillion in bonds in two rounds.

The Fed calls such measures “asset purchases”, where the central bank buys bonds to keep the long-term cost of borrowing down. The last round of asset purchases ended last year.

Mortgage-backed securities are debt backed by loans made to homeowners.

The unemployment rate in the US has been above 8% since January 2009, but the current 8.1% is down from the recent high of 10% in October 2009.

“To support continued progress toward maximum employment and price stability, the committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens,” the Fed said.

The Fed also confirmed that its $267 billion programme to reduce long-term borrowing costs for firms and households would continue for the rest of the year.

In a move dubbed “Operation Twist”, the central bank buys longer-term bonds from retail lenders and swaps them for shorter-term bonds.

 

Clyde K. Valle

Clyde is a business graduate interested in writing about latest news in politics and business. He enjoys writing and is about to publish his first book. He’s a pet lover and likes to spend time with family. When the time allows he likes to go fishing waiting for the muse to come.

Recent Posts

White House 2024: Voter Fraud Claims Flood Social Media

Misleading allegations, rumours and outright lies about voting and fraud are flooding online spaces in…

1 day ago

Spain: At Least 158 Killed In The Country’s Worst Flooding Disaster

At least 158 people have died in Spain's worst flooding disaster in generations. On October…

4 days ago

Russia Fines Google $20,000,000,000,000,000,000,000,000,000,000,000, Surpassing Global GDP

Google has been fined two undecillion (a two followed by 36 zeroes) roubles by a…

4 days ago

Financing Your Home Remodel: 7 Tips for Success

Embarking on a home remodel is an exciting journey, promising enhanced comfort, increased property value,…

2 weeks ago

Donald Trump Serves Up McDonald’s Fries While Kamala Harris Celebrates 60th Birthday with Church Choir

The US presidential candidates continued to campaign across key swing states on October 20. Footage…

2 weeks ago

America PAC: Elon Musk Promises to Award $1M Each Day to Swing States Voters

Elon Musk has said he will give away $1 million a day to a registered…

2 weeks ago