Fed to Inject New $600 Billion Stimulus
img class="alignleft size-full wp-image-26894" title="handing-out-money(2)" src="/files/wxrimport/2010-11/handing-out-money2.jpg" alt="" width="205" height="105" /><The BBC reports:
The Federal Reserve has announced that it will pump $600bn (£373bn) into the US economy by the end of June next year to try to boost the fragile recovery.
This stimulus, which equates to $75bn a month, is slightly more than many economists had expected.
The US economy grew by an annual rate of 2% between July and September, which is not enough to reduce high unemployment.
Some analysts see QE as the last chance to get the US economy back on track.
Second step
Interest rates are already close to zero, which means the Fed cannot reduce rates any further in order to boost demand - the more traditional policy used by central banks to stimulate growth.
Instead, it has announced a fresh round of QE, in which it will create money to buy long-dated government bonds. The move was widely flagged, with most analysts expecting the Fed to pump $500bn into the economy.
The programme has been dubbed QE2, after the Fed pumped $1.75tn into the economy during the downturn in its first round of QE.
It is in addition to the Fed's previously announced plan to reinvest $250bn-$300bn of repayments it is due from existing US mortgage debt investments over the coming year.
Click here to read more.