Fed To Buy Debt; Divided Over Effectiveness
Federal Reserve officials have decided, in a nearly unanimous vote on August 10, to purchase a small amount of government debt in its attempt to boost the slumping economy, according to the Fed’s minutes of that meeting published today.
During the meeting, which lasted longer than usual, Fed officials expressed significant concern over the state of the US economy. The FOMC (Federal Open Market Committee), which is responsible for setting the nation’s monetary policy, voted 9 to 1 to use proceeds from the central bank’s mortgage bonds to purchase long-term Treasury securities. The Fed has spent approximately $1.4 trillion to buy mortgage-linked securities and debts owed by government-controlled entities like Fannie Mae and Freddie Mac between January 2009 and March 2010.
The minutes of the meeting further revealed that those present were divided over how effective this course of action would be.
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