WASHINGTON - The Federal Reserve’s decision last month to plow $1.2 trillion into the economy reflected growing concerns about a vicious economic cycle in which rising unemployment will curtail consumer spending, potentially into 2010.
Documents released Wednesday provided insights into the Fed’s decision to revive the economy by buying long-term government debt and boosting purchases of mortgage-backed securities from Fannie Mae and Freddie Mac. Projections for economic activity in the second half of 2009 and in 2010 “were revised down” by the Fed’s staff, who did not provide updated forecasts.
“Most participants viewed downside risks as predominating in the near term,” according to minutes of the Fed’s closed-door meeting on March 17-18.
Fed driven by danger of worsening recession - Stocks & economy- msnbc.com
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