In a much anticipated action, at 2:15 p.m. on Wednesday, November 3, the Federal Reserve (Fed) announced further measures designed to stimulate the economy. These measures, commonly referred to as Quantative Easing II (QE2), consist of a plan to print an additional $600 billion between now and June 30, 2011, in order to purchase a wide range of both short-term and long-term Treasury securities. In addition, the Fed expects to continue reinvesting principal payments from their vast mortgage security holdings into the Treasury market, a policy that is expected to add between $250 billion and $300 billion to the program’s size. In their statement, the Fed noted that they could adjust both the pace of the purchases and the overall size of the program “in light of incoming information” in order to “best foster maximum employment and price stability.”
Click here to read J.P. Morgan's review of what the implications of QE2 mean for the financial markets.