We predicted last week that Bernanke would launch QE3 this week.
Today, the Fed announced that it will buy $40 billion dollars of mortgage-backed securities per month …indefinitely.
Bernanke claims that the main justification for QE3 is to boost employment. This is slightly ironic, since Bernanke’s policies are largely responsible for creating high unemployment in the first place.
This is in addition to numerous other easing programs. As CNBC notes:
In addition, the Fed said it will continue its program of selling shorter-dated government debt and buying longer-term securities, a mechanism known as Operation Twist. It also will continue its policy of reinvesting principal payments from agency debt and mortgage-backed securities back into mortgages.
“These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative,