The Federal Reserve on Wednesday unveiled a controversial new plan to buy $600 billion in Treasury securities through June, hoping to spur growth in a disappointingly slow U.S. economy.
After two days of discussions, Fed officials decided to go ahead with a much-anticipated program, saying they stand ready to buy more government debt if the economy's persistent weakness causes inflation to remain too low and unemployment too high.
By buying government bonds, the Fed aims to keep long-term interest rates low, hoping this will spur consumers to spend and companies to invest more, thus helping to propel the economy.
The central bank said it expects to buy $850 billion to $900 billion of Treasurys, in all, during the next eight months. In addition to a basic $600 billion, the Fed expects to buy about $35 billion per month in Treasurys to replace mortgage bonds in its portfolio as they are retired, a decision taken in August.
