US Fed launches $400bn stimulus plan

THE US Federal Reserve last night moved to counter what it said were significant risks to the US economy with an effort to lower long-term borrowing costs and bolster housing.

The central bank said it would launch a $400 billion (€295bn) programme to weight its $2.85 trillion balance sheet more heavily toward longer-term securities by selling short-term government debt to purchase longer-dated Treasuries.

It said it would reinvest proceeds from maturing mortgage and housing agency bonds it holds back into the mortgage market, an acknowledgment of how weak housing remains.