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News Link • Federal Reserve

Fed prints another $600bn to keep US recovery on track

The latest round of quantitative easing (QE) comes on top of the $1.7 trillion already completed and is intended "to promote a stronger pace of recovery", the Fed said. It is changing tack, however, buying US government bonds instead of corporate debt and mortgage-backed securities. Existing QE will be rolled over, but also recycled into treasuries. By the end of June, the Fed expects to have bought $850bn to $900bn of treasuries – roughly $110bn a month, $75bn of which will be additional QE. The Fed also kept inerest rates at 0pc to 0.25pc, where they have been since December 2008. Yields on 10-year US government bonds dipped 0.06 percentage points to 2.53pc as the markets digested the news, which was largely as expected. Lower yields feed back into the economy by reducing borrowing rates for companies and households, thereby stimulating investment and spending. The dollar fell against most currencies due to QE, raising fears of a retaliatotry strike by the Bank of Japan on Friday.

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