Fed to Buy $600 Billion of Treasuries to Boost Growth


"Fed 'will adjust the program to foster employment and price stability.'"

The Federal Reserve will buy an additional $600 billion of Treasuries through June, expanding record stimulus and risking its credibility in a bid to reduce unemployment and avert deflation.

Policy makers, who said new purchases will be about $75 billion a month, "will adjust the program as needed to best foster maximum employment and price stability," the Fed's Open Market Committee said in a statement in Washington. The central bank kept its pledge to keep interest rates low for an "extended period."

Including Treasury purchases from reinvesting proceeds of mortgage payments, the Fed will buy a total of $850 billion to $900 billion of securities through June, or about $110 billion per month, the New York Fed said in accompanying statement. The panel kept its benchmark interest rate at zero to 0.25%, where it has been since December 2008.

Stocks have climbed and the dollar weakened in anticipation of further Fed easing. Since Bernanke said Aug. 27 the Fed "will do all that it can" to keep the recovery going, the Standard & Poor's 500 Index gained about 14% through yesterday, and the dollar declined more than 7% against a basket of six currencies.

The Fed's decision is the biggest in a marathon week of worldwide central bank meetings. Australia and India yesterday raised interest rates to cool inflation. Tomorrow, the Bank of England may leave the door open to more aid to the U.K. economy while the European Central Bank holds the line against price increases. The Bank of Japan on Nov. 5 may accelerate stimulus for its economy.

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