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Third time’s a charm for the Fed?

by admin on September 14, 2012

After months of sitting on the sidelines, the Federal Reserve today approved a series of moves to encourage borrowing and spending. It’s the third round of stimulus—aka quantitative easing—that the Fed has undertaken to spur a still-sputtering economy along.

The Fed voted 11 to 1 to approve a plan to spend $40 billion a month on mortgage bonds as the latest effort to make home purchases more affordable and to lift the residential real estate industry. Plus, the Fed said it would keep short-term interest rates at their current record-low rate six months longer than previously stated, meaning that the near-zero rates they charge banks will stay in place through mid-2015.

The Fed’s move was cheered by Wall Street, which responded by lifting both the NYSE and the Nasdaq 1.5 percent by 2:30 p.m. today. But it was met with criticism by Republicans in Washington, who saw the Fed’s action either as not effective on its own merits or an inappropriate move to take, given the coming November 6 presidential election.

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