According to MarketWatch, "The Federal Reserve said Wednesday that it would keep intact its current policy of record-low interest rates. In a statement following its meeting, the central bank also said it’s prepared to buy U.S. Treasuries if warranted. The Fed said the economy was weakening, but that it still expected a recovery in the second half. The Fed said it was worried about deflation. The Fed said it would continue to pump money into the various credit channels. Richmond Fed president Jeffrey Lacker dissented. He wanted the central bank to buy Treasuries instead of other assets."
MarketWatch added:
The Federal Reserve said Wednesday it was prepared to purchase longer term Treasury securities if needed to improve conditions in private credit markets.
This would be a new tool in the Fed’s arsenal to repair financial markets. The move would be controversial.
The Federal Open Market Committee kept its interest rate target in a range of zero to 0.25%, as expected. Rates will need to stay close to zero for "some time," the statement said.
Fed watchers believe that rates may stay close to zero for more than a year. In the statement after the meeting, the Fed made clear it would continue to flood the financial system with money.
The Fed said was ready to buy Treasuries "if evolving circumstances indicate that such transactions would be particularly effective in improving conditions in private credit markets."
Some economists worry that buying Treasuries would cause foreign investors to lose their appetite for the securities.
Douglas A. McIntyre
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