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Fed unveils bold plan to aid US economy

Fed unveils bold plan to aid US economy

Alarmed by the chronically weak U.S. economy, the Federal Reserve launched an aggressive new effort on Thursday to boost the market and make borrowing cheaper for years to come. And it made clear it won’t stop there and is ready to try other stimulative measures if employment doesn’t pick up.

The Fed announced its new programme of Quantitative Easing that plans to buy mortgage backed securities at a pace of $40 billion per month.This will be the third round of the bond-buying programme in an effort to spur the economy where the QE3 Purchase will continue indefinitely until the outlook for the labour market improves. The Fed also declared its intention to keep US interest rates near zero from late-2014 to mid-2015 – six months longer than previously planned.

Chairman Ben Bernanke himself warned that the Fed’s actions are no panacea for slow growth and high unemployment, and said the economy will probably need help even after the recovery strengthens.

On the FX market there seems to be a broad selling pressure on the US dollar  which drove EUR/USD above 1.3033  level and GBP/USD is trading well above 1.60 range.

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