Federal Reserve to spend $45B a month to buy bonds, links rate hike to 6.5 pct. unemployment [View all]
Source: Washington Post
WASHINGTON — The Federal Reserve will spend $45 billion a month to sustain an aggressive drive to keep long-term interest rates low. And it set a goal of keeping a key short-term rate near zero until unemployment drops below 6.5 percent.
The policies are intended to help an economy that the Fed says is growing only modestly with 7.7 percent unemployment in November.
The Fed said in a statement issued Wednesday that it will direct the money into long-term Treasurys to replace an expiring bond-purchase program. The new purchases will expand its investment portfolio, which has reached nearly $3 trillion.
The central bank will continue buying $40 billion a month in mortgage bonds. All told, its monthly bond purchases will remain $85 billion. They are intended to reduce already record-low long-term rates to encourage borrowing and accelerate growth.
Read more: http://www.washingtonpost.com/business/federal-reserve-wraps-up-2012-still-facing-high-unemployment-and-sub-par-economic-growth/2012/12/12/cea83aee-4419-11e2-8c8f-fbebf7ccab4e_story.html
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