Fed Ramps Up Economic Stimulus, Ready to Do More
The U.S. Federal Reserve on Wednesday delivered another round of monetary stimulus and said it was ready to do even more to help an increasingly fragile U.S. economic recovery.
The central bank expanded its “Operation Twist” by $267 billion, meaning it will sell that amount of short-term securities to buy longer-term ones to keep long-term borrowing costs down. The program, which was due to expire this month, will now run through the end of the year.
Fed Chairman Ben Bernanke, speaking at a news conference after a two-day policy meeting, said the central bank was concerned Europe’s prolonged debt crisis was dampening U.S. economic activity and employment.
“If we are not seeing sustained improvement in the labor market that would require additional action,” he said. “We still do have considerable scope to do more and we are prepared to do more.”
The Fed slashed its estimates for U.S. economic growth this year to a range of 1.9 percent to 2.4 percent, down from an April projection of 2.4 percent to 2.9 percent. It cut forecasts for 2013 and 2014, as well.