The Fed’s Next Steps

Will these steps help to lower interest rates?  We can only hope.  There have been talks of this before so there is no guarantee.  The Wall Street Journal reported that “Federal Reserve officials, preparing for a policy meeting next week, are considering whether to pump more money into the economy by expanding their lending and securities-purchase programs.  The Fed has already used its main tool to the limit, having pushed its target interest rate, the federal-funds rate, to near zero. It already has ramped up lending and asset purchases. But it could decide to push harder by, for instance, purchasing long-term Treasury securities or increasing its purchases of debt issued or guaranteed by Fannie Mae and Freddie Mac. It is unclear whether the Fed will decide to take new steps at its meetings on March 17 and 18.  Treasury purchases could help bring down long-term interest rates by pushing up the price of government bonds and thus pushing down their yields. That, in turn, could bring down other long-term rates because Treasury debt is a benchmark for many loans and securities.”