4 Nov 2010

US Fed to put $600bn into economy

9:03 am on 4 November 2010

The United States Federal Reserve has unveiled its latest plan to stimulate the US economy, committing to buy $US600 billion more in government bonds.

The move is aimed at further lowering interest rates and encouraging borrowing.

The bank said it would buy about $US75 billion in longer-term Treasury bonds a month.

It said it would regularly review the pace and size of the programme and adjust it as needed depending on the path of the recovery.

In its post-meeting statement, the Fed described the economy as "slow", and said employers remained reluctant to add to payrolls. It said measures of inflation were "somewhat low."

The central bank repeated its vow to keep the federal funds rate on overnight loans ultra-low for an extended period.

With the US economy expanding at only a 2% annual pace in the third quarter of this year and the jobless rate seemingly stuck around 9.6%, the central bank had come under pressure to do more to stimulate business activity.

It had already cut overnight interest rates to near zero in December 2008 and bought about $US1.7 trillion in government debt and mortgage-linked bonds.