WASHINGTON – The Federal Reserve says it will start buying long-term government bonds, opening a new front in its battle to lift the U.S. out of recession.
The Fed says it will buy up to $300 billion in long-term Treasury securities over the next six months.
Doing so could help the economy because many kinds of debt — from mortgages to corporate bonds — are linked to Treasury rates. Fed purchases would boost Treasury prices and drive down their rates. That would ripple through and lower rates on other kinds of debt.
The Fed left a key bank lending rate at a record low of between zero and 0.25 percent.
The Fed also will buy more mortgage-backed securities and debt guaranteed by Fannie Mae and Freddie Mac in a move to help that market.