A Wall Street rally moved benchmark stock indexes to multiyear highs yesterday after the Federal Reserve said it will buy mortgage debt at a pace of $40 billion per month to try to spur a stronger economic recovery.
Fed Chairman Ben Bernanke called on policy makers to now do their part -- including addressing the so-called "fiscal cliff" of looming tax break expirations and government spending cuts.
The Fed's newest monetary policy moves, which likely will hold the federal funds rate near zero at least through mid-2015, aren't a "panacea" to the nation's economic woes, Bernanke said.
"While I think we can make a meaningful and significant contribution to reducing this problem, we can't solve it," he said.
If the labor forecast doesn't improve substantially in the coming months, the Fed will continue to buy mortgage-backed securities, make additional asset purchases and use other policy tools.
The Fed's moves on a third round of "quantitative easing" are a cautious and limited, but helpful step, according to economist Fred Breimyer, board member of the New England Economic Partnership. "They're not transformative, and no one expects a quick return to low unemployment and all those good economic conditions that we would like to see," he said.
But it's important to note the Fed's acknowledgment that the housing market is doing better, Breimyer said. "It's building on limited success, but some success ... rather than fighting failure," he said.
Above all, the Fed is trying to demonstrate its willingness to take action, said Andre Mayer, senior vice president at Associated Industries of Massachusetts.
"Bernanke has been calling on the politicians to act for months, and there's been no response at all," he said. "The political deadlock and the uncertainties associated with the so-called 'fiscal cliff' have really become a burden on the economy."
The Dow and the S&P 500 closed at their highest levels since December 2007 on the Fed news, and the Nasdaq ended at its highest since November 2000.
Most Popular Stories
- SEO Traffic Lab Celebrate Wins at Digital Marketing Event 'Internet World 2013' in London
- Social Media Initiatives Should Follow Customers' Lead
- Apple CEO: Offshore Units Not a 'Tax Gimmick'
- U.S. Senate Accuses Apple of Large-scale Tax Avoidance
- UTEP Water Recycling Project Wins Venture Titles
- Marketo Makes a Mint in IPO: Stock Shoots Up More than 50 Percent
- Bieber Booed at Billboard Awards
- Crude Oil Up, Gasoline Down
- Austin Startup Compare Metrics Raises $3.5 Million for Expansion
- Why So Many Top 'Car Guys' Are Actually Women