Federal Reserve Chairman Ben Bernanke - AP Photo
WASHINGTON (AP) - In case you hadn't seen what prompted yesterday's big stock market rally, the Federal Reserve has unveiled a series of bold steps designed to stimulate the economy.
The Fed pledges to spend $40 billion a month to buy mortgage bonds for as long as it deems necessary to make home buying more affordable. It plans to keep short-term interest rates at record lows through mid-2015 - six months longer than previously planned. And it's ready to try other measures if hiring doesn't pick up.
Fed Chairman Ben Bernanke made it clear to reporters at a news conference he thinks the economy will need the Fed's intervention even after the recovery strengthens.
The Fed also lowered its outlook for economic growth this year, though it's more optimistic about the next two years. It expects growth to be no stronger than 2 percent this year. That's down from its forecast of 2.4 percent in June.
It still thinks the unemployment rate won't fall below 8 percent this year. The rate is now 8.1 percent. It estimates it will fall as low as 7.6 percent next year and 6.7 percent in 2014. It also expects inflation to remain at or below 2 percent for three years.
First Coast News