Fed to buy mortgage bonds, plans to keep rates ultra-low into 2015, says more action may come
The Federal Reserve unleashed a series of bold and open-ended steps Thursday designed to stimulate the economy by boosting the stock market and making it cheaper for people to borrow and spend.
The Fed said it will spend $40 billion a month to buy mortgage bonds for as long as it deems necessary to make home buying more affordable. It plans to keep short-term interest rates at record lows through mid-2015 — six months longer than previously planned. And it's ready to try other stimulative measures if hiring doesn't pick up.
"The idea is to quicken the recovery," Chairman Ben Bernanke said at a news conference. But Bernanke made clear that he thinks the economy will need the Fed's help even after the recovery strengthens.
Stock prices rose steadily after the Fed's announcement at 12:30 p.m. Eastern time. The Dow Jones industrial average closed up more than 200 points. Other stock averages also surged.
The Fed's policy committee announced the aggressive actions after a two-day meeting. Its moves pointed to how sluggish the U.S. and global economies remain more than three years after the Great Recession ended.
Thursday's announcement marked the Fed's latest dramatic intervention since the financial crisis erupted in 2008 and the Great Recession shot unemployment into double digits. The Fed cut its benchmark short-term rate to near zero and has kept it there for nearly four years. And it's bought more than $2 trillion in Treasurys and mortgage bonds to try to drive down long-term rates.
Yet for all that, the U.S. economy is still struggling. The unemployment rate is 8.1 percent.
Read more: Fed to buy mortgage bonds, plans to keep rates ultra-low into 2015, says more action may come | Fox News
Get ready folks for $5 gas as a result of the continued devaluation of our currency.
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