FED Starts Third Round of Bond Buying, Federal Funds Target Rate Unchanged at 0.0-0.25%, EURUSD to 4-month Highs - 14.9.2012

The Federal Open Market Committee at its statement yesterday decided to increase policy accommodation by launching a third round of mortgage-backed securities purchases as the unemployment rate remained above 8.0 per cent. The FED will be buying bonds worth $40 billion every month without any amount limitation or specific end date. The bond purchases program will continue until labor market substantially improves according to FOMC. At the same time, the Committee decided to keep the target Federal Funds Rate at the range 0.0 to 0.25%. Additionally it will continue the “Operational Twist” program until the end of the year, extending the average maturity of its holding by selling short-term bonds and buying long term, setting a downward pressure on long term interest rates. The single currency hovered above 1.30 versus the US dollar after the FOMC statement, advancing to a 4-month high at 1.3052 while the Gold rose to $1776.48 a more than 6-months high.