The Fed’s next move: $40B in monthly bond purchases

The Federal Reserve today outlined a series of bold and open-ended steps to stimulate the economy by making it cheaper for consumers and businesses to borrow and spend. The Fed says it will spend $40 billion a month to buy mortgage bonds for as long as it deems necessary to make home buying more affordable. It plans to keep short-term interest rates at record lows through mid-2015—six months longer than previously planned. And it’s ready to try other measures if hiring doesn’t pick up. “The idea is to quicken the recovery,” says Fed Chairman Ben Bernanke, who made it clear that he thinks the economy will need the Fed’s intervention even after the recovery strengthens. The Fed’s policy committee announced the aggressive actions after a two-day meeting. Its moves point to how sluggish the U.S. and global economies remain more than three years after the Great Recession ended. The Fed also lowered its outlook for economic growth this year, though it’s more optimistic about the next two years. It expects growth to be no stronger than 2% this year; that’s down from its forecast of 2.4% in June. And it still thinks the unemployment rate won’t fall below 8% this year. Read the full story here.