The Federal Reserve has unveiled its own quantitative easing plan in a bid to kick-start the US credit markets.
Similar to the Bank of England's strategy to buy UK gilts, the Federal Open Market Committee has launched a new facility to purchase up to $300bn in longer-term Treasury securities over the next six months.
It will also purchase up to an additional $750bn of agency mortgage-backed securities, bringing its total purchases of the securities to upwards of $1.25trn this year, and will increase its agency debt buys by up to $100bn to a total of $200bn.
"The Federal Reserve has launched the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses and anticipates that the range of eligible collateral for this facility is likely to be expanded to include other financial assets," the Fed says.
"The committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of evolving financial and economic developments."IFAonline
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