America’s Central Bank has announced that it is to pump money into the US economy by launching a fresh new programme of bond buying, otherwise known as quantitative easing.
Ben Bernanke, chairman of the Federal Reserve, explained that the bank will purchase mortgage-backed securities to the value of $40 billion (approximately £25 billion) a month.
According to the renowned economist, who has been integral to the Federal Reserve’s approach to the economic environment post-recession, this is one way of helping the country recover better, while ensuring that inflation remains consistent over time.
“These actions, which together will increase the [Federal Open Market] Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative,” he said in a statement.
The markets in both the US and Asia responded positively to the news, with the Wall Street’s Dow Jones Industrial Average jumping to over 200 points. In Hong Kong, meanwhile, the Hang Seng went up by 2.8 per cent, a level which hasn’t been achieved since May of this year.
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