JIM WATSON/AFP/Getty Images
Federal Reserve Chairman Ben Bernake. The Fed today decided to undertake another round of quantitative easing to stimulate the U.S. economy.
The Federal Reserve's Open Market Committee wrapped up its September meeting and, as expected, it's decided to undertake another round of "quantitative easing" — injecting money into the economy in order to stimulate economic activity and lower the 8.1 percent unemployment rate. The markets took off in response to news, with the Dow up 110 point in early afternoon trading.
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.