What do we do about our lagging economy? There’s always stimulus! The Federal Reserve announced today that they will try to stimulate the market yet again with another round of bond-buying, proving that when it comes to money, our government has proven to be a one-trick pony lately.
The latest round of stimulus might inspire many an eye-roll, but according to the Wall Street Journal, this time is different from before. The Fed is launching a bond-buying program to purchase mortgage-backed securities by $40 billion a month, that much is certain. The key difference: the Fed isn’t limiting purchases this time around. The new program is described as being open-ended until the economy improves. From the statement:
“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.”
According to Newser, the Fed is also expected to keep interest rates low for the foreseeable future. The Dow rose roughly 50 points within minutes of the announcement.
Analysis has been rolling in steadily all afternoon. Paul Ashworth, the chief US economist at Capital Economics, doesn’t think the plan will amount to much:
“The problem is that we doubt it will be enough to get the economy on the right track. It’s only a matter of time before speculation begins as to when the Fed will raise its purchases from $40bn a month.”
More updates can be found over at WSJ’s live blog. Do you think that more stimulus is the way to go?