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Fed to buy more Treasuries

By Sheyna Steiner · Bankrate.com
Friday, October 15, 2010
Posted: 1 pm ET

On Wednesday the Federal Reserve Bank of New York announced another round of Treasury purchases. The tentative schedule calls for $32 billion worth of Treasury securities to be purchased through mid-November.

There are probably more economic stimulus measures on the way.

On Friday, Ben Bernanke gave a speech that outlined the Federal Reserve's concerns about low inflation and the need for further economic stimulus from the central bank.

In his Federal Reserve blog, Bankrate's senior financial analyst Greg McBride blogged about the Fed's deflation concerns in September following the meeting of the Federal Open Market Committee.

Lower interest rates as a result of the easing process are very nearly a given, but beyond that there are many uncertainties.

At Time.com, "The Curious Capitalist" blog written by Stephen Gandel makes an interesting point in a post titled "In Fed shift, Bernanke says he wants more inflation."

Historically, the mission of the Federal Reserve has been to squash inflation. Now faced with persistently high unemployment and sluggish spending by consumers and businesses, the Fed finds itself in the strange position of needing to boost inflation rather than lower it.

Gandel points out one risk inherent in this scenario.

"If the Fed just ends up driving up prices and not actually boosting consumption and the economy, we will end up in a worse situation than we are in right now."

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