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Fundranker Blog—September 2012 Archive

Aggressive Fed Stimulus

The Federal Open Market Committee of the Federal Reserve System showed that its considerable concern over the struggling U.S. jobs situation outweighs political concerns by announcing another aggressive economic stimulus program today despite how close we are to the presidential election. The Federal Reserve will buy $40 billion of mortgage-related debt per month until the jobs outlook improves significantly as long as inflation remains in check.

The FOMC tied the Fed’s new stimulus program directly to economic conditions, stating "If the outlook for the labor market does not improve substantially, the Committee will continue its purchase of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability."

In another show of concern over the health of the economy, the FOMC said "the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015." That extends from late 2014 their earlier low federal funds rate guidance.

Investors apparently approved the announcement wholeheartedly. The broad market S&P 500 Index was up 1.55% at 3:00pm today.

Posted 9/13/12 3:28pm ET in Economy, Market | Permalink | Comments (0)