Fed unveils more monetary stimulus

14 September 2012

The Federal Reserve (Fed) is to embark on another round of quantitative easing (QE) in an attempt to boost the ailing US economy, it has emerged.

Policymakers at the central institution's Federal Open Market Committee (FOMC) announced yesterday (13 September) that they had voted in favour of further monetary stimulus.

Under the terms of this latest policy decision, the Fed will purchase "additional agency mortgage-backed securities at a pace of $40 billion per month" while also continuing its program of extending the average maturity of its securities holdings until the end of 2012.

Interest rates were once again kept below 0.25 per cent, with Fed chairman Ben Bernanke also reducing the institution's growth forecast for the US economy to two per cent for this year.

The FOMC indicated it was concerned that without further QE, financial expansion would not be robust enough to "generate sustained improvement in labour market conditions".

By Gary Cooper

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