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US Fed announces further QE measure

US policy-makers have announced further emergency measures to prop up the recovery of the world's biggest economy.

The Federal Reserve said it would pump an extra 600 billion US dollars (£372.8 billion) into its economy over the next eight months in a second round of quantitative easing.

The money, which is higher than the 500 billion US dollars (£310.7 billion) which had been expected, is intended to boost its economic recovery, which has slowed since the summer.

The US injected some 1.7 trillion US dollars into the economy through quantitative easing in the height of the recession, but the Fed believes a further move, which has been dubbed QE2, is now necessary.

The Bank of England's Monetary Policy Committee will on Thursday announce whether it will take similar action in the UK.

The Fed also reiterated that its official interest rate would remain between 0% and 0.25% for "an extended period".

The US dollar, which has weakened in recent weeks in anticipation of QE2, fell further against the pound and the euro following the announcement.

The Dow Jones also dropped by about 0.1%.

Philip Shaw, chief economist at Investec, said: "We are surprised by the extent of the Fed's commitment - we thought the level would be lower.

"But it should help America to recover."


From Belfast Telegraph