Fed Announces $45B-a-Month Bond Buy
Plans to hold interest rates down until jobless rate hits 6.5%
By Kevin Spak, Newser User
Posted Dec 12, 2012 12:10 PM CST
Ben Bernanke prepares to deliver remarks in this file photo.   (AP Photo/David Goldman)

(Newser) – The Federal Reserve dropped a bombshell today, announcing that it would spend $45 billion a month on bond purchases to keep interest rates low, and that it would keep its short-term rates near zero as long as it takes to get unemployment below 6.5%. It will also keep up its current practice of spending $40 billion a month on mortgage bonds, the AP reports, bringing its total monthly spending to $85 billion, and growing its now almost $3 trillion portfolio.

This is a "historic move" that "will change how we think about Fed policy, yet again," writes Sudeep Reddy at the Wall Street Journal. Instead of pegging its targets to specific time frames, the Fed is now tying its policies to specific economic outcomes. The policy is sometimes referred to as the "Evans rule," because Chicago Fed President Charles Evans has been pushing for it for months. The Fed is also sending a strong, loud signal that it's willing to allow inflation to rise if that's what it takes to reduce unemployment.

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Showing 3 of 15 comments
saucier111
Dec 12, 2012 4:41 PM CST
If you take a close look at the fed, it's just the worlds largest ponzi scheme. We can thank the replubician party,Richard Nixon in 1971 took us off the gold standard.
WarmWeatherGuy
Dec 12, 2012 3:21 PM CST
Time to put your 401K into gold and silver.
jonnynonos77
Dec 12, 2012 1:50 PM CST
"Bringing its total monthly spending to $85 billion." LOL... keep in mind that if Obama wins his tax increase it will generate about $150 billion a YEAR in new revenue. That's how f**ked things are.