Fed To Expand Asset Purchases Next Year

Central bank to buy $45 bln of Treasuries a month; says it will keep rates low as long as the jobless rate is above 6.5%.

The Federal Reserve said it will buy $45 billion a month of Treasury securities starting in January, expanding its asset-purchase program, and it linked the outlook for its main interest rate to unemployment and inflation.

“The committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor-market conditions,” the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington.

Lacker Dissents

Richmond Fed President Jeffrey Lacker dissented for the eighth consecutive meeting, saying he opposed the asset purchase program. Lacker opposed the FOMC’s June decision to extend Operation Twist through the end of the year along with additional asset purchases, saying more bond buying probably won’t quicken economic growth.

Fiscal Tightening

“Even if we don’t go off the fiscal cliff there’s going to be some federal fiscal drag next year, and there’s still Europe,” Josh Feinman, the New York-based global chief economist for DB Advisors, the Deutsche Bank AG asset management unit that oversees about $228 billion, and a former Fed senior economist, said before the Fed statement.

Lowe’s Rally

Lowe’s Cos., the second-largest U.S. home-improvement retailer, has rallied 37 percent this year as consumers spend more on appliances, hardware and tools.

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