The Federal Reserve says it would buy up more than 1 trillion dollars in Treasury and mortgage-backed securities to keep financial sector afloat. Ummm? With what?
The announcement was made at the end of a two-day meeting by the Federal Open Market Committee, which kept its base lending rate in a range of zero to 0.25 percent.
The Fed, which had been expected to keep its federal funds rate unchanged, said it "anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period."
The US central bank will be printing massive amounts of money for these purchases to help foster recovery in the recession-mired economy, which shrank at a 6.2 percent pace in the last quarter of 2008.
On Wednesday, The dollar plunged over the Federal Reserve plan. The euro jumped to a two-month high of 1.3466 dollars at 1930 GMT from 1.3013 dollars late in New York on Tuesday.
Against the Japanese currency, the dollar fell to 96.03 yen from 98.61 yen on Tuesday. "The dollar's depreciation makes sense because the sharp drop in Treasury rates will reduce the relative attractiveness of US assets to foreign investors," said Jay Bryson, global economist at Wachovia Securities.