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

Video Snowstorm Sweeps Northeastern US

'This is nothing like we feared it would be,' New York City Mayor Bill de Blasio says; he had warned storm could be one of worst in city history More

Millions of Displaced Nigerians Struggle With Daily Existence

Government acknowledges over a million people displaced in 2014 due to fight against Boko Haram insurgency More

Facebook: Internal Error to Blame for Outages

Temporary outage appeared to spill over and temporarily slow or block traffic to other major Internet sites 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.
Obama Urges Closer Economic Ties During Historic India Visiti
X
Aru Pande
January 26, 2015 9:33 PM
U.S. President Barack Obama says the United States and India must do better to capitalize on untapped potential in their economic relationship - by removing some of the roadblocks to greater trade and investment. As VOA correspondent Aru Pande reports from New Delhi, Obama spoke after participating in India’s Republic Day celebration.
Video

Video Obama Urges Closer Economic Ties During Historic India Visit

U.S. President Barack Obama says the United States and India must do better to capitalize on untapped potential in their economic relationship - by removing some of the roadblocks to greater trade and investment. As VOA correspondent Aru Pande reports from New Delhi, Obama spoke after participating in India’s Republic Day celebration.
Video

Video US, EU Threaten New Russia Sanctions Over Ukraine

U.S. President Barack Obama has blamed Russia for an attack by Ukrainian separatists that left dozens dead in the port of Mariupol and cast further doubt on the viability of last year’s cease-fire with the Kyiv government. VOA’s Michael Bowman reports from Washington.
Video

Video White House Grapples With Yemen Counterterrorism Strategy

Reports say the U.S. has carried out a drone strike on suspected militants in Yemen, the first after President Barack Obama offered reassurances the U.S. is continuing its counterterrorism operations in the country. The future of those operations has been in question following the collapse last week of Yemen’s government. VOA White House correspondent Luis Ramirez reports.
Video

Video Kerry Warns Against Violence in Nigeria Election

US Secretary of State John Kerry visited Nigeria Sunday in a show of the level of concern within the U.S. and the international community over next month’s presidential election. Chris Stein reports.
Video

Video Zoo Animals Show Their Artistic Sides

The pursuit of happiness is so important, America's founding fathers put it in the Declaration of Independence. Any zookeeper will tell you animals need enrichment, just like humans do. So painting, and even music, are part of the Smithsonian National Zoo's program to keep the animals happy. VOA’s June Soh met some animal artists at the zoo in Washington. Faith Lapidus narrates.
Video

Video Worldwide Photo Workshops Empower Youth

Last September, 20 young adults from South Sudan took part in a National Geographic Photo Camp. They are among hundreds of students from around the world who have learned how to use a camera to tell the stories of the people in their communities through the powerful medium of photography. Three camp participants talked about their experiences recently on a visit to Washington. VOA’s Julie Taboh reports.
Video

Video Saudi, Yemen Developments Are Sudden Complications for Obama

The death of Saudi Arabia's King Abdullah and the collapse of Yemen’s government have cast further uncertainty on U.S. efforts to fight militants in the Middle East and also contain Iran’s influence in the region. VOA White House correspondent Luis Ramirez reports on the new complications facing the Obama administration and its Middle East policy.
Video

Video Progress, Some Areas of Disagreement in Cuba Talks

U.S. and Cuban officials are reporting progress from initial talks in Havana on re-establishing diplomatic ties. U.S. Assistant Secretary of State (for Western Hemisphere Affairs) Roberta Jacobson said while there was agreement on a broad range of issues, there also are some “profound disagreements” between Washington and Havana. VOA State Department correspondent Pam Dockins has the story.
Video

Video US, Japan Offer Lessons as Eurozone Launches Huge Stimulus

The Euro currency has fallen sharply after the European Central Bank announced a bigger-than-expected $67 billion-a-month quantitative easing program Thursday - commonly seen as a form of printing new money. Henry Ridgwell reports for VOA from London on whether the move might rescue the eurozone economy -- and what lessons have been learned from similar programs around the world.
Video

Video Nigerian Elections Pose Concern of Potential Conflict in 'Middle Belt'

Nigeria’s north-central state of Kaduna has long been the site of fighting between Muslims and Christians as well as between people of different ethnic groups. As the February elections approach, community and religious leaders are making plans they hope will keep the streets calm after results are announced. Chris Stein reports from the state capital, Kaduna.
Video

Video As Viewership Drops, Obama Puts His Message on YouTube

Ratings reports show President Obama’s State of the Union address this week drew the lowest number of viewers for this annual speech in 15 years. White House officials anticipated this, and the president has decided to take a non-traditional approach to getting his message out. VOA White House correspondent Luis Ramirez reports.
Video

Video S. Korean Businesses Want to End Trade Restrictions With North

Business leaders in South Korea are calling for President Park Geun-hye to ease trade restrictions with North Korea that were put in place in 2010 after the sinking of a South Korean warship.Pro-business groups argue that expanding trade and investment is not only good for business, it is also good for long-term regional peace and security. VOA’s Brian Padden reports.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid