By Sudeep Reddy.Doc

By Sudeep Reddy The feederal Reserve is expected to announce a new round of bond-buying today to lower long-term arouse rates to boost the parsimony. Debate is raging inside and extracurricular the Fed about how much good it entrust do, if any. Proponents express purchasing hundreds of billions of dollars more in Treasury bonds for propose add only modest support for the economy. Foes warn that it could backfire by commoveing up commodity prices, sowing seeds of unwelcome inflation in the future, or by undermining confidence in the Feds ability to manage â€" and even sotually reduce â€" its holdings. Ahead of the Feds 2:15 p.m. announcement, heres a run shovel in of the key issues: What is quantitative easing, or QE? Its the electronic equivalent of starting up the Feds picture presses to create money for buying financial assets in the mart in this case long-term U.S. Treasury bonds. Buying bonds pushes down their yields, and the interest rates across the debt markets that are closely buttoned to U.S. Treasury rates. How does the Fed expect QE2, as it has been dubbed, to influence the economy? Lower borrowing costs should financial aid some homeowners refinance, even if many others dont qualify because of weak assurance scores or diminished home equity.

It also should help businesses that can qualify for loans through cheaper credit, though larger corporations already can access money at cheap rates. (One large-mouthed question: will all the new liquidity will lead banks to lend more? Theyre already school term on more than $1 trillion of reserves without lend it out.) The Fed figures that buying up government debt, in theory, should push investors into riskier assets â€" such as stocks and corporate bonds â€" and raise their value. It also will tend to weaken the dollar, helping U.S. exporters be more agonistical in overseas markets. What did the first round of QE accomplish? From celestial latitude 2008 to March 2010, the Fed bought $1.7 trillion of Treasurys and mortgage-backed securities. The move is... If you want to get a full essay, order it on our website: Ordercustompaper.com

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