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Fed Takes More Bold Steps on Economy Fed Takes More Bold Steps on Economy

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ECONOMY

Fed Takes More Bold Steps on Economy

The Federal Reserve announced a fresh round of asset purchases aimed at spurring borrowing and boosting the economy.

  • The central bank will keep buying $40 billion in mortgage-backed securities per month and will begin buying $45 billion in long-term Treasury securities per month.
  • In an unexpected move, the Fed set a target unemployment rate of 6.5 percent and said it wants to keep the inflation rate no higher than 2.5 percent over a one- or two-year horizon. This indicates that the Fed does not expect to shift from its low-interest rate stance until those targets are met.
  • The bond-buying move will further expand the Fed’s balance sheet and accompanies the bank’s open-ended quantitative easing program, known as QE3.
  • Fed Chairman Ben Bernanke will explain the bank’s actions at a press conference this afternoon. He is expected to repeat his warning to Congress that the Fed can do little to offset the economic impact of going over the year-end fiscal cliff.

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