US stocks slumped, sending the Standard & Poor’s 500 Index to its biggest drop in a month, as the Federal Reserve announced plans to buy $US400 billion of long- term debt and cited risks to the economic outlook.
Fed policy makers will replace some bonds in their portfolio with longer-term Treasuries in an effort to further reduce borrowing costs and keep the economy from relapsing into a recession, confirming market speculation that the central bank was planning an ‘‘Operation Twist’’ similar to one of the central bank’s program in the 1960s.
‘‘There are significant downside risks to the economic outlook, including strains in global financial markets,’’ the Fed statement said.
Fed policy makers will replace some bonds in their portfolio with longer-term Treasuries in an effort to further reduce borrowing costs and keep the economy from relapsing into a recession, confirming market speculation that the central bank was planning an ‘‘Operation Twist’’ similar to one of the central bank’s program in the 1960s.
‘‘There are significant downside risks to the economic outlook, including strains in global financial markets,’’ the Fed statement said.
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Sep 21, 2011
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