Fed Will Buy Back Debt

The Federal Reserve said Tuesday it will use the proceeds from its mortgage-backed portfolio to buy back portions of government debt, a sign of the end of the Fed’s optimism that the recession is truly over. In buying $10 billion in Treasury securities a month—a small fraction of the $700 billion Treasury debt—the Fed will not be tackling the $2.3 trillion balance sheet amassed in response to the 2008 financial crisis. “Information received since the Federal Open Market Committee met in June indicates that the pace of recovery in output and employment has slowed in recent months,” the Fed said in a statement. Interest rates will also remain at their current low level—0.25 percent—set in December 2008, at the heart of the financial meltdown.