Fed to Buy Hundreds of Billions More in Bonds

By: Associated Press
By: Associated Press

Washington, D.C. (AP) - The Federal Reserve is making a bold effort to
invigorate the economy by announcing it will buy hundreds of
billions more in Treasury bonds.

The Fed says it will buy $600 billion of long-term government
bonds by the middle of 2011 to further drive down rates on
mortgages and other debt. This will be in addition to an expected
$250 billion to $300 billion in purchases over the same period from
reinvesting proceeds from its mortgage portfolio.

The idea is for cheaper loans to get people to spend more and
stimulate hiring. The Fed says it will review whether adjustments
are needed depending on how the economy is performing.

Some worry the Fed action will do little to boost the economy
because interest rates are already historically low. Others fear
the bond purchases could drive inflation too high over the long
term and unleash speculative buying in assets like stocks.

(Copyright 2010 by The Associated Press. All Rights Reserved.)


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