Fed Reassures on MBS Plan

The Federal Open Market Committee said in a statement accompanying its decision to drop the fed funds target range to a record low rate of zero to 0.25% that it "stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant." The FOMC said it "will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability," including expanding the aforementioned agency program beyond its existing commitment to purchase $500 billion in MBS and $100 billion in debt. The committee said that it "anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time" and that it also is "evaluating the potential benefits of purchasing longer-term Treasury securities."