Fed to buy Treasuries

The committee said it would buy up to $300 billion of longer-term Treasury securities over the next six months to help improve conditions in private credit markets.

The Open Market Trading Desk at the New York Fed will handle the purchases. The New York Fed said the Desk will concentrate purchases in the two- to ten-year sector of the nominal Treasury curve, although purchases will occur across the nominal Treasury and TIPS yield curves.

The purchases will be conducted with the Fed's 16 primary dealers.

On average, the desk will purchase Treasury securities two to three times per week. The desk plans to hold the first purchase operation late next week.

The 10-strong committee unanimously supported the decision to buy Treasuries and the other actions.

The purchase of an additional $750 billion-worth of agency mortgage-backed securities, which brings its total purchases of these securities to up to $1.25 trillion this year, and the increase in purchases of agency debt by up to $100 billion to up to $200 billion, is aimed at providing greater support to mortgage lending and housing markets.

The committee said that it saw "some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term." As a result, the committee said the federal funds target range was likely to remain at 0% to 0.25% "for an extended period."

News of the government bond purchases follows the successful launch of the Bank of England's quantitative easing programme. The British programme has resulted in significantly lower yields for the gilts which the Bank has agreed to buy. Corporate bond yields have also fallen.

The committee said it would "continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of evolving financial and economic developments."

Click here to read the Fed's statement

Click here to read the New York Fed's statement