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Federal Reserve pumps $600bn into US economy

The Federal Reserve is to pump a further $600bn into the economy in the next eight months in a bid to bolster a recovery in the US economy.

The Fed was expected to inject $500bn in this latest round of quantitative easing having already injected $1.75trn into the economy.

By the end of June next year the Fed expects to have bought $850bn to $900bn of treasuries. This will be done at a rate of $110bn a month, $75bn of which will be QE.

Skandia Investment Group head of asset allocation Rupert Watson says: “The additional QE by the Fed will not in itself provide a substantial boost to the economy, which seems in any event to be recovering. However, it does underline that the Fed is willing to act on any sign of weakness. As a result investors should feel more confident that the recovery will continue.”

The news has been well received in markets with the FTSE 100 up 1.62 per cent in early trades. At 8.22am the blue chip index stood at 5842.34.

The Dow Jones was up 0.24 per cent at close.

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