The Federal reserved announced that it will be pouring in more funds to combat the economic downturn. Another $1.5 trillion will be pumped into the financial system in efforts to stabilize the economy and spark a real signs of recovery.
The move was decided in a two-day policy meeting. The Fed will be buying up $300 billion in long-term US Treasury bonds in the next six months to prop up the private credit markets. It will also increase purchases of mortgage-backed securities by $750 billion.
Fed chief Ben Bernanke has made comments previously at how a recovery is in sight. The committee’s statement at the end of the meeting echoed Bernanke’s comments, stating “Although the near-term economic outlook is weak, the Committee anticipates that policy actions to stabilize financial markets and institutions, together with fiscal and monetary stimulus, will contribute to a gradual resumption of sustainable economic growth.”
Experts see this move as a way for the Fed to be one-step ahead of the market.
The message came out to the surprise of financial markets and spurred Wall Street’s positive week on. The Dow climbed 1.23% to close at 7,486.58. Nasdaq gained 29.11 to end 1.99% higher at 1,491.22. T Standard & Poor’s 500 index gained 2.09% to close at 749.35.
