$ 600 billion more in the economic system to support the U.S. recovery by the end of June 2011.
Updated: November 3, 2010 6:56
U.S. economic stimulus package - The Fed injected $ 600 billion
The U.S. Federal Reserve announces new $ 600 billion into the economy to support the U.S. recovery by the end of June 2011, following the takeover of the House of Representatives by the Republicans.
U.S. economic stimulus package - The Fed injected $ 600 billion
The U.S. Federal Reserve (Fed) announced Wednesday a new $ 600 billion more in the economic system to support the U.S. recovery by the end of June 2011. The Fed will buy 75 billion dollars of bonds each month.
The decision comes in the wake of elections that led Washington to a Republican majority in the House of Representatives calling for fiscal austerity.
The purpose of this massive injection of liquidity to support the recovery in employment and prices, said in a statement the Monetary Policy Committee of the Fed. It was disappointed by the progress of the Fed to its dual objective of ensuring full employment and price stability.
The Fed kept its key rate as expected close to zero, its level in nearly two years.
The institution said it would adjust its strategy according to changes in the economy over the coming months.
This monetary easing is not without risk. Some economists fear that it causes an acceleration of inflation and it encourages speculation in financial markets.
These new measures to stimulate the world's largest economy could weaken the U.S. dollar to go up the value of a barrel of oil. The crude is trading above $ 84 U.S..
Reaction indices
The North American equity markets were little changed Wednesday, when the Fed announced its new measures.
The Dow Jones in New York had gained 0.2% at market close. The Toronto Stock Exchange lost 0.07% of its value.
The U.S. dollar weakened after the announcement, pushing the dollar of 0.26 percent, to 99.32 cents U.S..
Oil prices ended the day up 79 cents at $ 84.69 a barrel.
The arrival of the Republicans might indicate that there will be opposition to any tax increase or any significant new spending, even if the expenditure is incurred in order to stimulate the economy. Republicans are also more insistent on border security, which can affect international trade.
Moreover, the consequences of the American elections mid-term could be felt on the stock market in early 2011, when the elect will enter officially in office.
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