In a bold move, the Federal Reserve has launched a third round of monetary stimulus – to try to boost the weak US economy.
In an open ended programme, the US central bank will buy 40 billion dollars of mortgage debt each month and says it will continue to do that until the outlook for job creation improves substantially.
“If the outlook for the labour market does not improve substantially, the committee will continue its purchase of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability,” the Fed said in a statement.
Fed chairman Ben Bernanke and his policymakers also pledged to keep interest rates ultra-low until at least the middle of 2015.
The moves reflect just how concerned Fed officials have become about the health of the world’s largest economy which grew by a tepid 1.7 percent annual rate in the second quarter of this year.
High unemployment is depressing consumer spending which in turn is keeping inflation low which gives the Fed leeway to launch another round of a programme that is essentially printing money.
The central bank has, however, to be careful that it is not seen as being political in these moves helping President Obama.
Republicans, including presidential nominee Mitt Romney, have criticised the policies for igniting inflation while doing little to spur the economy.
Fed OKs more stimulus until job growth picks up