The U.S. Federal Reserve (Fed) has fulfilled expectations of more stimulus for the faltering economy, taking aim now at driving down mortgage rates.
The Fed said on Sept. 13 it will buy $40 billion of mortgages per month in an attempt to foster a nascent recovery in the real estate market. The purchases will be open ended, meaning that they will continue until the Fed is satisfied that economic conditions, primarily in unemployment, improve.
The Open Market Committee said, "The Committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions."
Faced with an unemployment rate stubbornly above eight percent, and other indicators showing only halting signs of recovery, the Fed was pressed into action by a market worried that the recovery was on wobbly ground and needed more stimulus.
The Fed also said it expects to keep its benchmark short-term interest rate near zero though mid-2015, a change from a previous pledge to keep rates low through 2014.