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Wednesday
Sep212011

Fed Will Try to Drive Interest Rates Even Lower

Jupiterimages/Thinkstock(WASHINGTON) -- In an effort to drive long-term interest rates lower to boost the economy, the Federal Reserve said Wednesday it will sell $400 billion of long-term securities for an equal amount of shorter-term instruments.

The Fed’s Open Markers Committee announced it intends to complete the purchase by the end of June 2012.  The expected new stimulus measure, dubbed Operation Twist, was in line with economists expected.

“This program should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative,” according to a Federal Reserve statement.

The Federal Reserve repeated that economic conditions warrant “exceptionally low” interest rates through mid-2013, with inflation moderating slightly from earlier in the year.

The Fed also expects some pickup in growth in the coming quarters and that unemployment rate will decline only gradually.

The committee concluded a two-day meeting Wednesday in Washington, D.C., one of eight scheduled meetings of the year.

After the last meeting, the Federal Reserve released a statement Aug. 9 that it will keep the federal funds rate low, possibly at 0 to 1/4 percent, at least through mid-2013, which the committee reiterated on Wednesday.

Copyright 2011 ABC News Radio







ABC News Radio