Fed may revamp bond purchases to aid economy

The Federal Reserve is expected to announce a revamped bond-buying plan Wednesday to maintain support for the U.S. economy.
By MARTIN CRUTSINGER, AP Economics Writer Published: December 12, 2012


In brief

Fed is likely to alter plan

The Federal Reserve is expected to announce a revamped bond-buying plan Wednesday to maintain support for the U.S. economy. The goal would be to keep downward pressure on long-term interest rates and encourage people and companies to borrow and spend.

If it succeeds, the Fed might soften the blow from tax increases and spending cuts that will begin in January if Congress can't reach a budget deal.

Tuesday, the Fed began a two-day meeting that will end with an announcement of its policy decisions. Afterward, the Fed will update its forecasts for the economy, and Fed Chairman Ben Bernanke will hold a news conference.

The Fed is expected to unveil a program to buy $45 billion a month in long-term Treasurys. It would replace an expiring program, Operation Twist, in which the Fed sold $45 billion a month in short-term Treasurys and used proceeds to buy that amount in longer-term Treasurys.

Associated Press

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