Fed Undertakes QE3 With $40 Billion in MBS Purchases Each Month

Fed Undertakes QE3 With $40 Billion in MBS Purchases Each Month

The Federal Reserve said it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month in a third round of quantitative easing as it seeks to boost growth and reduce unemployment.

 

Ben Bernanke

Federal Reserve Chairman Ben S. Bernanke during a hearing of the Joint Economic Committee on Capitol Hill. Photographer: Brendan Smialowski/AFP/Getty Images

`Full-On' Fed QE3 Toward Year End, LeBas Says

 
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Sept. 13 (Bloomberg) — Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC, talks about the Federal Reserve’s decision to expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month. He speaks with Julie Hyman on Bloomberg Television’s “Lunch Money.” (Source: Bloomberg)

Rupkey Says Fed's MBS-Purchase Plan `Too Tentative'

 
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Sept. 13 (Bloomberg) — Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ, talks about the Federal Reserve’s decision to expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month. (Source: Bloomberg)

Fed Buys $40B MBS Monthly, Zero-Rate Policy to 2015

 
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Sept. 13 (Bloomberg) — Bloomberg’s Mike McKee reports that the Federal Reserve said it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month in a third round of quantitative easing as it seeks to boost growth and reduce unemployment. The FOMC also said it would likely hold the federal funds rate near zero “at least through mid-2015.” He speaks on Bloomberg Television’s “Lunch Money.”

Auth: Fed Decision Is Mildly Positive

 
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Sept. 13 (Bloomberg) — Federated Investors Steve Auth reacts to the Federal Reserve decision to expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month. He speaks on Bloomberg Television’s “Lunch Money.” (Source: Bloomberg)

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“If the outlook for the labor market does not improve substantially, the committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases and employ its other policy tools as appropriate,” the Federal Open Market Committee said today in a statement at the end of a two-day meeting in Washington.

The FOMC said it would probably hold the federal funds ratenear zero “at least through mid-2015.” Since January, the Fed had said the rate was likely to stay low at least through late 2014. The Fed said “a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens.”

Chairman Ben S. Bernanke is enlarging his supply of unconventional tools to attack unemployment stuck above 8 percent since February 2009, a situation he has called a “grave concern.” The decision risks provoking a renewed backlash from Republicans, including presidential nominee Mitt Romney, who say Bernanke’s policies threaten to ignite inflation while doing little to spur the economy.

Stocks soared after the statement. The Standard & Poor’s 500 Index jumped 1.2 percent to 1,454.41 at 1:56 p.m. in New York. The yield on the 10-year Treasury note rose to 1.79 percent from as low as 1.71 percent.

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