Some Doubt Major Benefit To Economy From Fed Action

By: The Associated Press Email
By: The Associated Press Email

WASHINGTON - Although Wall Street seems happy with today's actions by the Federal Reserve, some economists think there will be only a slight benefit to the economy.

The Fed says it will spend $40 billion a month to buy mortgage-backed securities for as long as necessary. It's also planning to keep short-term interest rates at record lows through mid-2015.

The actions, announced after a two-day meeting, point to how sluggish the economy remains, more than three years after the end of the recession.

But Paul Ashworth of Capital Economics says, "We doubt it will be enough to get the economy on the right track." He says "it's only a matter of time" before people start guessing when the Fed will boost the purchases above the $40 billion a month.

Critics also warn that more bond purchases raise the risk of higher inflation later.

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