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Fed to buy US government debt


Fed to buy US government debt


The US Federal Reserve has surprised the financial markets by announcing it will buy up to 300 billion dollars worth of longer-term US government debt over the next six months and expand purchases of mortgage-related debt.

The idea is to ease credit market conditions and boost the US economy. Federal Reserve Chairman Ben Bernanke and his colleagues announced the move at the end of their latest two day policy meeting. In doing that they have followed the example of the British and Japanese central banks in pumping money directly into the economy. With US interest rates near zero that is one of the few moves left to the Fed to start banks lending again and revive the US economy. The Fed also repeated that borrowing costs would likely stay unusually low for some time.
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