By Sewell Chan and Washington
FEDERAL Reserve officials, acknowledging that their confidence in the recovery had dimmed, moved again yesterday to keep interest rates low and encourage economic growth.
They also signalled that more aggressive measures could follow if the job market and other indicators continued to weaken.
With short-term interest rates already close to zero, the policymakers have relatively few tools available to encourage consumer and corporate spending. They plan to use the proceeds from the Fed's huge mortgage bond portfolio to buy long-term government debt.
That may put downward pressure on long-term interest rates and make it easier for companies and people to borrow. For consumers, it means that mortgage rates are likely to remain at record lows for some time.
Although the immediate impact is likely to be modest, the decision is a turnabout from only a few months ago, when officials were discussing when to raise interest rates and gradually shrink the $US2.3 trillion ($A2.5 trillion) balance sheet amassed through the Fed's response to the 2008 financial crisis. In buying new Treasury securities of at least $US10 billion a month - a fraction of the $US700 billion in Treasury debt the Fed holds - the central bank will help keep money available in the financial markets.
NEW YORK TIMES