Thursday the markets opened with speculation as the Federal Reserve had a scheduled meeting to discuss the possibility of launching "Quantitative Easing 3" or "QE3". By an 11-to-1 vote, the Federal Reserve decided to start QE3. The program will begin with open-ended bond purchases. In fact, the Federal Reserve, headed by Ben Bernanke, will buy $40 billion of agency mortgage-backed securities each month. QE3 will begin on Friday.
The announcement by the Federal Reserve is also keeping in place with "Operation Twist", the effort the Federal Reserve began in September of 2011. Operation Twist consisted of swapping short-dated securities and reinvesting the proceeds of older securities. The Federal Reserve adds $85 billion of long-term securities each month through the end of the year.
The Federal Reserve also pledged to keep their interest rates low "at least through mid-2015". The Federal Reserve claims to be acting "to support a stronger economic recovery". The central bank claims it will continue to monitor information. “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 until such improvement is achieved in a context of price stability,” the FOMC said.
The actions by the Federal Reserve help lend credence to those who worry about the economy of the United States.
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