Federal Reserve chairman Ben Bernanke speaking at a press conference in Washington on Thursday.
Noting continued weakness of the overall U.S. economy, Federal Reserve chairman Ben Bernanke announced Thursday the Fed would launch a third round of so-called quantitative easing, or QE3 — an aggressive bond-buying program designed to lower long-term interest rates in the hopes of stimulating economic activity and reducing unemployment.
The Fed said it will spend $40 billion a month purchasing mortgage debt through the end of the year, and left open the possibility of continuing the program until conditions improve. Additionally, it will continue its bond purchases as well as push back its deadline for raising short-term interest rates from 2014 to 2015 — another way the Fed’s attempted to spur growth through more borrowing and spending.
Stocks shot up on the news. But the decision will undoubtedly spark controversy, and this afternoon Twitter lit up over the move.
The New York Times’ Binyamin Appelbaum laid out the details of the decision and the context for debate.
The Wall Street Journal’s Paul Vigna examines just how open-ended a bond-buying program this one will be.
And Dylan Matthews of The Washington Post identifies the key differences between the new stimulus program and the Federal Reserve’s previous one, namely that the Fed will continue to buy bonds if the economic situation in the U.S. does not improve.