Fed to resume asset purchases to avoid fresh money market turmoil

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Federal Reserve chair Jerome Powell says the move is not a return to crisis-era quantitative easing programmes

Federal Reserve chair Jerome Powell speaks at a meeting in Denver, Colorado, the US, October 8 2019. Picture: DANIEL BRENNER/BLOOMBERG

He suggested that the purchases would be made up of Treasury bills and stressed the buying should not be seen as a return of the crisis-era quantitative easing programmes that the Fed engaged in a decade ago to boost the economy. Three-month bill yields fell on the comments, while US stocks pared losses and the dollar was higher.

But he added, “we will act as appropriate to support continued growth, a strong job market, and inflation moving back to our symmetric 2% objective”. The job market has also downshifted, even as unemployment has fallen to a half-century low of 3.5%. Nonfarm payrolls grew by an average of 157,000 per month in the third quarter, compared with gains above 200,000 earlier in the expansion.

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