(Reuters) – The U.S. Federal Reserve’s third round of bond-buying could ultimately rival the size of its first huge quantitative easing, which was widely seen as boosting growth.
The sheer scale of the program and the radical shift in policy it marks will shape the legacy of Fed Chairman Ben Bernanke, whose term may end before the buying is through.
The Fed initially disappointed some investors on Thursday when it said it would buy $40 billion of mortgage-backed securities each month. That is far less than the $75 billion a month it bought in its second round of bond-buying, or the more than $100 billion monthly tab for its first round.
But this time, the Fed has promised that “if the outlook for the labor market does not improve substantially,” it won’t stop buying and could ramp up its spending further.
Depending how the Fed defines “substantially” and how long it takes to get there, it could end up buying bonds for several years, adding $1.7 trillion or more to its balance sheet, analysts say.
Reuters has the full article
