Fed backs more stimulus, sidesteps pressure

WASHINGTON, September 21, 2011 (AFP) – The Federal Reserve redoubled its efforts to juice the US economy on Wednesday, unveiling a $400 billion stimulus plan and shunning political calls for the bank to take a back seat. The Fed’s top policy panel unleashed the latest in a battery of tools aimed at rekindling the troubled US economy, this time moving to make mortgages and borrowing cheaper by pushing down long-term interest rates.

In a plan dubbed “Operation Twist,” the Fed said it would switch bonds in its huge portfolio with a maturity of less than three years to bonds with a maturity of six to 30 years.

The move would not involve printing any more money, but supporters say it could lower rates and prod cash-rich banks to put their idle reserves to work

Amid criticism that the Fed has become too interventionist, the Fed pointed to an economic recovery buckling under high unemployment and a protracted housing crisis.

“Economic growth remains slow,” the Federal Open Market Committee statement said. “Recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated.”

The size of the Fed’s plan surprised some economists, including Joel Naro