Fed to Aggressively Buy Bonds

The Federal Reserve announced Thursday that it would buy back $40 billion of mortgage debt per month until the employment outlook improves. The Fed also announced it will keep interest rates “exceptionally low” through the middle of 2015 to bolster the economy. The stimulus program not only represents a significant shift in the U.S. monetary policy—tying the bond buying to the economic outlook—it is also a much more aggressive step than many analysts expected. The decision came after a dismal jobs report last week—the U.S. added only 96,000 jobs in August, less than are needed to keep up with population growth. U.S. stocks rose on the news, with Standard & Poor’s above its highest close since 2008.