{"id":41287,"date":"2012-09-14T07:43:20","date_gmt":"2012-09-14T07:43:20","guid":{"rendered":"https:\/\/armbanks.am\/2012\/09\/14\/236370\/"},"modified":"2024-12-15T12:59:30","modified_gmt":"2024-12-15T12:59:30","slug":"u-s-federal-reserve-bank-to-spend-40-billion-a-month-to-boost-u-s-economy","status":"publish","type":"post","link":"https:\/\/armbanks.am\/en\/2012\/09\/14\/41287\/","title":{"rendered":"U.S. Federal Reserve bank to spend $40 billion a month to boost U.S. economy"},"content":{"rendered":"

YEREVAN, September 14. \/ARKA\/. <\/strong>The U.S. Federal Reserve is taking the unusual step of promising to spend $40 billion a month to buy mortgaged-back securities for as long as it takes to see substantial improvement in the jobs market, Thespec.com portal reports.<\/p>\n

\u201cThe employment situation remains a grave concern,\u201d chairman Ben Bernanke told a news conference in Washington on Thursday. The Reserve sets U.S. monetary policy and is made up of members of the private banking industry, but its board of governors is appointed by the president.
\n\u201cWhile the economy appears to be on a path of moderate recovery, it isn\u2019t growing fast enough to make significant progress, reducing the unemployment rate,\u201d said the board chairman Bernanke.<\/p>\n

Bernanke noted that fewer than half of the 8 million jobs lost in the recession have been restored, and the U.S. unemployment rate sits at 8.1 per cent, nearly unchanged from the start of the year.
\nHe noted it was worrisome that the unemployment rate fell last month, not because more jobs were created, but because more people had stopped looking for work.<\/p>\n

Bernanke repeated several times his hope that these new measures will boost the U.S. housing market, which would in turn improve consumer confidence and create jobs \u2013 emphasizing that the Reserve would not pull the rug out from people if the economy improves.<\/p>\n

\u201cEven after the economy starts to recover more quickly, and even after the unemployment rate begins to move down more decisively, we\u2019re not going to rush to begin to tighten policy,\u201d he said. \u201cWe\u2019re going to give it some time to make sure the recovery is well-established.\u201d<\/p>\n

However, he cautioned that monetary policy alone is not a panacea. \u201cIt is not by itself able to solve these problems. We\u2019re looking for policy makers in other areas to do their part. We\u2019ll do our part. We can\u2019t solve this problem by ourselves.\u201d<\/p>\n

The Reserve did not specify what conditions or benchmarks would need to be met for it to stop these stimulus measures of buying mortgage-backed bonds.<\/p>\n

As part of Thursday\u2019s announcement, the board of governors also emphasized again that it anticipated interest rates would remain low, well into mid-2015, a revision from earlier statements.
\nThat is seen as an effort to boost consumer confidence to spend or make investments, if they see the value of the homes rise. As well, the policy should affect financial asset prices, including interest rates on mortgages and corporate bond rates.<\/p>\n

James Marple, a senior economist at Toronto Dominion Bank\u2019s economics division in Toronto, called Thursday\u2019s move a bold statement that is specifically tied to the U.S. jobs market.<\/p>\n

Unlike earlier rounds of bond-buying to boost the economy, the Reserve did not specify a total amount or an end date for this new policy, he noted.<\/p>\n

\u201cThey wanted to emphasize that rates will stay low even as the economy improves so that you can invest now because the expectation should be that the return on that investment will be higher than the cost of borrowing,\u201d he said.<\/p>\n

Although some consider it a rare move for the board of governors to adopt such a significant stimulus policy when the highly charged U.S. presidential election is only two months away, Bernanke insisted the organization was neutral.<\/p>\n

The move, which comes just two months before the U.S. presidential elections, reflects just how poorly the U.S. economy has fared and its inability to reduce unemployment.<\/p>\n

The bond purchases are intended to lower long-term interest rates to spur borrowing and spending. The Federal Reserve has previously bought $2 trillion in U.S. treasury bonds and mortgage-backed securities since the 2008 financial crisis.<\/p>\n

Skeptics caution that further bond buying might provide little benefit. Rates are already near record lows.<\/p>\n

Critics also warn that more bond purchases raise the risk of higher inflation later.\u20140-<\/p>\n","protected":false},"excerpt":{"rendered":"

The U.S. Federal Reserve is taking the unusual step of promising to spend $40 billion a month to buy mortgaged-back securities for as long as it takes to see substantial improvement in the jobs market, Thespec.com portal reports<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","tstyn_error":""},"categories":[12139,9216],"tags":[12172,12757],"class_list":{"0":"post-41287","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-economy-en","7":"category-news","8":"tag-economy-en","9":"tag-usa"},"acf":[],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/armbanks.am\/en\/wp-json\/wp\/v2\/posts\/41287","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/armbanks.am\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/armbanks.am\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/armbanks.am\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/armbanks.am\/en\/wp-json\/wp\/v2\/comments?post=41287"}],"version-history":[{"count":0,"href":"https:\/\/armbanks.am\/en\/wp-json\/wp\/v2\/posts\/41287\/revisions"}],"wp:attachment":[{"href":"https:\/\/armbanks.am\/en\/wp-json\/wp\/v2\/media?parent=41287"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/armbanks.am\/en\/wp-json\/wp\/v2\/categories?post=41287"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/armbanks.am\/en\/wp-json\/wp\/v2\/tags?post=41287"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}