WASHINGTON (MarketWatch) — The Federal Reserve pledged on Wednesday to start a controversial new $600 billion bond-buying spree to rescue the economy from its current doldrums.
The Federal Open Market Committee of the central bank said it would buy up to $600 billion in long-term Treasurys until the end of June 2011, including about $75 billion this month, in a strategy called quantitative easing.
This is the second time the Fed has engaged in quantitative easing, as it snapped up $1.7 trillion in mostly housing-related assets between December 2008 and March 2010.
The $600 billion purchase plan is slightly above the $500 billion expected by the market.
See text of FOMC statement.
But the length of the program and the average purchase rate was on the low end of estimates.
“They did as little as they could get away with,” said Bill Cheney, John Hancock chief economist, who said he was looking for purchases of about $100 billion per month.
Cheney said this might reflect internal Fed politics. Many FOMC members spoke against quantitative easing in the past few weeks.