The Federal Reserve Board's policymaking committee took an aggressive move to lower mortgage rates Wednesday by promising to purchase an additional $750 billion of agency mortgage-backed securities in the coming months.

The announcement brings the Fed's total commitment to this market to $1.25 trillion and is likely to significantly expand the central bank's balance sheet, which has been contracting in recent weeks and totaled $1.9 trillion on March 11.

In its statement the Federal Open Market Committee said the central bank will make the purchases to "provide greater support to mortgage lending and housing markets."

The Fed also plans to double its purchases of Fannie Mae and Freddie Mac's debt to $200 billion this year. Meanwhile, the central bank said it will buy up to $300 billion of long-term Treasury securities in the next six months "to help improve conditions in private credit markets."

The Fed did not expand the Term Asset-Backed Securities Loan Facility to accept commercial mortgage-backed securities, as some observers have speculated in recent days. But the central bank said "this facility is likely to be expanded to include other financial assets."

Using the same language as it has in previous FOMC meetings, the Fed promised to "employ all available tools to promote economic recovery."

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