The Federal Reserve plans to reinvest principal payments on its mortgage holdings into long-dated treasuries in an effort to revive the stuttering US economic recovery.
Dubbed ‘QE lite', the measures are the first from US authorities in about a year to bolster the sluggish economy.
The first round of QE saw the central bank buy $1.7trn of mortgage-related securities and US treasuries.
"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 says.
"To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve's holdings of securities at their current level by reinvesting principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities.
"The Committee will continue to roll over the Federal Reserve's holdings of Treasury securities as they mature."
World First chief economist Jeremy Cook says the dollar is likely to be "crucified" by the move.
"If your only tool is a hammer, then everything starts to look like a nail," Cook says.
"Bernanke and the Fed are now trying another almighty smash to get the US economy going and avoid a deflationary spiral in the largest consumer economy in the world."
The Fed also says it will keep benchmark interest rate close to zero for an "extended period".
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