News / USA

US Central Bank to Try to Boost Economy

US central bank poised to start pumping hundreds of billions of dollars into American marketplace in hopes of boosting sluggish economy

Federal Reserve chairman Ben Bernanke addresses a Federal Reserve conference, in Boston, 15 Oct 2010
Federal Reserve chairman Ben Bernanke addresses a Federal Reserve conference, in Boston, 15 Oct 2010

The U.S. central bank is poised to start pumping hundreds of billions of dollars into the American marketplace this week in hopes of boosting the nation's sluggish economy.

The Federal Reserve's policy-setting committee is meeting Tuesday.  Economic analysts say that by Wednesday they expect the central bank will approve a plan to buy $500 billion or more in U.S. government securities over a period of several months.

The idea behind the plan by Federal Reserve chairman Ben Bernanke is that the purchase of the securities will put downward pressure on long-term interest rates paid by businesses and consumers to borrow money.

That in turn could make it easier for consumers to increase spending, and for businesses to hire more workers.  Almost one in every 10 U.S. workers is unemployed, or about 15 million jobless overall.

Critics say the Bernanke plan, virtually unprecedented in the Federal Reserve's policy-making role, might not have much effect on the U.S. economy.  In addition, some analysts fear that pumping more money into the world's largest economy might be an over-reaction that could lead to long-term inflation.

Interest rates paid by businesses and consumers when they borrow money to buy homes are already at very low rates.  But such low interest rates have not spurred significant economic growth in the U.S., even though the recession officially has been over since June 2009.  

In the July-to-September period, the U.S. economy grew at a 2 percent annual rate, slightly more than the 1.7-percent expansion in the previous three months.  But economists think that 3 percent growth is needed over a period of time before businesses would start hiring significant numbers of new workers.

In 2009, in the midst of the recession, the Federal Reserve bought $1.7 trillion in mortgage and treasury bonds.  With the economy now growing modestly, analysts are predicting that the new purchase of securities might total at least $500 billion.  By purchasing securities gradually, the central bank could review that action's effect on the economy before adopting other measures.

The two-day meeting of the Federal Reserve's policy-setting group, the Open Market Committee, begins on the same day as U.S. congressional elections, choosing all 435 members of the House of Representatives and filling 37 seats in the 100-member Senate.  Opinion polls indicate that opposition Republicans are likely to regain control of the House and take seats from the majority Democrats in the Senate.

Republican control of even one of the congressional chambers could lead to further contentious debate over U.S. economic policy with President Barack Obama, a Democrat who does not face re-election until 2012.

Some information for this report was provided by AP, AFP and Reuters.

You May Like

Multimedia US Defense Secretary: Iraqi Forces Lack 'Will to Fight'

Ash Carter criticizes Iraq's reaction to Islamic State; National Security Advisor Susan Rice echoed Carter's concerns in an interview on CBS More

Boko Haram Surrounds Havens With Land Mines

Chad and Cameroon say huge numbers of land mines planted by Boko Haram fighters along Cameroon's border with Nigeria are a danger to people, livestock and soldiers More

Women Activists for Peace Cross Korean DMZ

Governments of Koreas give international delegation of women peace activists permission to pass through heavily fortified border, but some critics say symbolic crossing only benefits Pyongyang More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Turkey's Main Opposition Party Hopes for Election Breakthroughi
X
May 22, 2015 10:23 AM
Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Turkey's Main Opposition Party Hopes for Election Breakthrough

Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Europe Follows US Lead in Tackling ‘Conflict Minerals’

Metals mined from conflict zones in places like the Democratic Republic of Congo are often sold by warlords to buy weapons. This week European lawmakers voted to force manufacturers to prove that their supply chains are not inadvertently fueling conflicts and human rights abuses. Henry Ridgwell reports from London.
Video

Video Class Tackles Questions of Race, Discrimination

Unrest in some U.S. cities is more than just a trending news item at Ladue Middle School in St. Louis, Missouri. As VOA’s Kane Farabaugh reports, it’s a focus of a multicultural studies class engaging students in wide-ranging discussions about racial tensions and police aggression.
Video

Video Mind-Controlled Prosthetics Are Getting Closer

Scientists and engineers are making substantial advances towards the ultimate goal in prosthetics – creation of limbs that can be controlled by the wearer’s mind. Thanks to sophisticated sensors capable of picking up the brain’s signals, an amputee in Iceland is literally bringing us one step closer to that goal. VOA’s George Putic reports.
Video

Video Afghan Economy Sinks As Foreign Troops Depart

As international troops prepare to leave Afghanistan, and many foreign aid groups follow, Afghans are grappling with how the exodus will affect the country's fragile economy. Ayesha Tanzeem reports from the Afghan capital, Kabul.
Video

Video Poverty, Ignorance Force Underage Girls Into Marriage

The recent marriage of a 17-year old Chechen girl to a local police chief who was 30 years older and already had a wife caused an outcry in Russia and beyond. The bride was reportedly forced to marry and her parents were intimidated into giving their consent. The union spotlighted yet again the plight of many underage girls in developing countries. Zlatica Hoke reports poverty, ignorance and fear are behind the practice, especially in Asia and Africa.
Video

Video South Korea Marks Gwangju Uprising Anniversary

South Korea this week marked the 35th anniversary of a protest that turned deadly. The Gwangju Uprising is credited with starting the country’s democratic revolution after it was violently quelled by South Korea’s former military rulers. But as Jason Strother reports, some observers worry that democracy has recently been eroded.
Video

Video California’s Water System Not Created To Handle Current Drought

The drought in California is moving into its fourth year. While the state's governor is mandating a reduction in urban water use, most of the water used in California is for agriculture. But both city dwellers and farmers are feeling the impact of the drought. Some experts say the state’s water system was not created to handle long periods of drought. Elizabeth Lee reports from Ventura County, an agricultural region just northwest of Los Angeles.
Video

Video How to Clone a Mammoth: The Science of De-Extinction

An international team of scientists has sequenced the complete genome of the woolly mammoth. Led by the Swedish Museum of Natural History in Stockholm, the work opens the door to recreate the huge herbivore, which last roamed the Earth 4,000 years ago. VOA’s Rosanne Skirble considers the science of de-extinction and its place on the planet
Video

Video Blind Boy Defines His Life with Music

Cole Moran was born blind. He also has cognitive delays and other birth defects. He has to learn everything by ear. Nevertheless, the 12-year-old has had an insatiable love for music since he was born. VOA’s June Soh introduces us to the young phenomenal harmonica player.

VOA Blogs