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To help improve conditions in private credit markets, the FOMC decided to purchase up to $300 billion of longer-term Treasury securities over the next six months
The Federal Reserve on Wednesday surprised financial markets and committed to buy $300 billion in longer-term Treasurys to help the struggling American economy recover. The Fed also tweaked its other credit-easing programs by committing to buy more mortgage-backed securities and agency debt and include more asset-backed securities under a new credit facility starting this week.Most analysts had thought that the Federal Open Market Committee - the policy making arm of the central bank -- would keep the weapon of buying Treasurys in reserve in case of a crisis. The decision to buy Treasurys shows that the crisis is here. "To provide greater support to mortgage lending and housing markets," the FOMC said it would purchase an additional $750 billion of agency mortgage-backed securities. This brings the total amount of agency mortgage-backed securities to $1.25 trillion. The Fed said it would double its purchase of agency debt to $200 billion."Moreover, to help improve conditions in private credit markets, the FOMC decided to purchase up to $300 billion of longer-term Treasury securities over the next six months," the statement said.In addition, many unspecified types of assets will be included in the newest Fed credit facility, the Term Asset-Banked securities. All of these purchases ... more

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