Stimulating

Fed Plans New Stimulus Measures

With congressional deadlock, Federal Reserve Chairman Ben Bernanke could be the economy’s last hope. He plans to “unveil a program of U.S. Treasury bond purchases worth a few hundred billion dollars over several months” next Wednesday, according to The Wall Street Journal. This comes as a shock to some of the Fed's officials, who are still recovering from last year’s purchase of $1.75 trillion of Treasury and mortgage bonds. Thomas Hoenig, president of the Federal Reserve in Kansas, doled out some of the harshest criticism for the bond program when he said that a “more expansive monetary policy was a ‘bargain with the Devil.’" Bernanke’s eventual hope is to push the price of bonds up, thereby pushing interest rates down, which eventually could lead to more investment and spending to boost the economy.