Fed Chairman Ben Bernanke Announces Plans to Boost Economy and Increase Employment
U.S. stocks rose Friday, after the Standard & Poor’s 500 Index climbed to its highest level since 2007, as markets around the world responded to the Federal Reserve’s bond-purchase program to boost the economy.
The Fed said it will spend $40 billion a month to buy mortgage bonds for as long as it deems necessary, in an effort to support continued progress toward maximum employment and price stability.
Fed Chairman Ben Bernanke announced the asset purchases Thursday in an effort to boost growth in the country by making it cheaper for consumers and businesses to borrow and spend.
“The idea is to quicken the recovery,” Fed Chairman Ben Bernanke said at a news conference Thursday.
“The weak job market should concern every American. High unemployment imposes hardship on millions of people, and it entails a tremendous waste of human skills and talents. Five million Americans have been unemployed for more than six months, and millions more have left the labor force – many of them doubtless because they have given up on finding suitable work. As the skills of the long-term unemployed atrophy and as their connections to the labor market wither, they may find it increasingly difficult to get good jobs, to their and their families’ cost, of course, but also to the detriment of our nation’s productive potential.”
The Fed expects growth to be no stronger than 2 percent this year.
However, it still thinks the unemployment rate won’t fall below 8 percent this year. The rate stands at 8.1 percent. It estimates it will fall as low as 7.6 percent next year and 6.7 percent in 2014 and expects inflation to remain at or below 2 percent for three years.