Fed Keeps Pedal On Gas; Markets Hit Records

In surprise move, bond buying to hold steady
By Kevin Spak,  Newser Staff
Posted Sep 18, 2013 1:45 PM CDT
Fed Keeps Pedal On Gas; Markets Hit Records
In this Wednesday, July 17, 2013, file photo, Chairman of the Federal Reserve Ben Bernanke taps the microphone, as he testifies before the House Financial Services Committee on Capitol Hill.   (AP Photo/Charles Dharapak, File)

The Federal Reserve surprised the financial world today by announcing that it would continue buying roughly $85 billion worth of bonds a month. Many analysts had expected the central bank to ease off the quantitative easing gas pedal, but the committee announced that it had "decided to await more evidence that progress will be sustained." Borrowing costs have been on the rise in recent months, Bloomberg explains, and Ben Bernanke and company fear that signals a halt to growth.

The Fed's language also hinted that it was worried Congress would tighten spending further in the looming budget and debt limit showdowns, observes Sudeep Reddy at the Wall Street Journal. "Wow," he writes. "The Fed allowed market expectation to build for some kind of pullback," and its decision not to cut will boost markets in the short term. Indeed, the Dow and S&P quickly shot to record highs, CNN reports, while treasuries fell. (More quantitative easing stories.)

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