Fed To Buy $1.15 Trillion Of Debt

The Federal Reserve plans to buy $1.15 trillion of Treasuries and housing debt to improve conditions in private credit markets.

The central bank will try to end the financial crisis by buying as much as $300 billion of long-term Treasuries and more than doubling mortgage-debt purchases to $1.45 trillion. The moves are intended to reduce home loan and other interest rates.

Widening credit spreads, more-restrictive lending standards and credit market dysfunction are working against the monetary easing and leading to tighter financial conditions.

Meanwhile, yields on Fannie Mae and Freddie Mac mortgage-backed securities fell to their lowest levels in two months, suggesting the Fed’s plan to expand its asset purchases may soon push rates on new loans to record lows.