Fed beats expectations with $600bn QE2

The Federal Reserve will pump $600bn (£373bn) into the US economy by the end of June next year to try and boost the fragile recovery.

This stimulus, which equates to $75bn a month, is slightly ahead of economists' expectations. It has been called QE2, after the Fed pumped $1.75trn into the economy during the downturn in its first round of QE. The US economy grew by an annual rate of 2% between July and September, which is not enough to reduce high unemployment. Some analysts now see QE as the last chance to get the US economy back on track. Interest rates are already close to zero, which means the Fed cannot reduce rates any further in order to boost demand- the more traditional policy used by central banks to st...