Fed takes small step to support recoveryNews added by ProWEB Media on August 11, 2010
Gary Linnell

ProWEB Media

Joined: December 27, 2005

The Federal Reserve today said it will use proceeds from its investments in mortgage bonds to purchase government debt on a small scale.

The move is intended to decrease long-term rates on mortgages and corporate debt, but economists don't anticipate a significant impact.

However, the action does make clear that the Fed believes the economic recovery is losing steam and the bank is ready to become more aggressive, if necessary.

The fed said it believes economic growth will be "more modest" than predicted in its meeting late in June.

In addition, the Fed acknowledged "subdued" inflation, and said it would hold its target for a key interest rate at zero to 0.25 percent for an "extended period."
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