Fed to spend $40B a month on bond purchases

WASHINGTON (AP) — The Federal Reserve unleashed a series of bold and open-ended steps Thursday to stimulate the economy by making it cheaper for consumers and businesses to borrow and spend.

The Fed said it will 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 take other unconventional steps if job growth doesn't pick up.

A statement from the Fed's policy committee said it thinks "a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens."

The committee announced the series of aggressive actions after a two-day meeting. Its moves pointed to how sluggish the economy remains more than three years after the Great Recession ended.

Stock prices rose on the news. But some economists said they thought the benefit to the economy would be slight.

"We doubt it will be enough to get the economy on the right track," said Paul Ashworth, an economist at Capital Economics. "It's only a matter of time before speculation begins as to when the Fed will raise its purchases from $40 billion a month."