Fed OKs New Stimulus: Dow Up 200 Points

Federal Reserve Chairman Ben Bernanke cites "grave concern" about unemployment.
3:00 | 09/13/12

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Transcript for Fed OKs New Stimulus: Dow Up 200 Points
Good evening. And we have big news on the american economy tonight. A new shot of adrenaline on the way, as today, ben bernanke, the head of the federal reserve bank, said he's prepared to do something unprecedented. He is going to pump $40 billion into the markets each month to power up spending. And he says, he's not going to let up. He's going to keep it coming. And his goal? To bring unemployment down to 7.6% by the end of next year. Tonight, there is a debate and reaction on all sides. Wall street, though, seems excited. The dow soaring more than 200 points, to the highest close in nearly five years. So, will this new plan work? Abc's bianna golodryga breaks it down for us right now. Reporter: What the federal reserve chairman did today was unprecedented. Announcing the fed would buy back some $40 billion worth of mortgage-backed securities each month. What makes today's decision so remarkable is that it's open-ended. Meaning that the fed can print as much money as it wants for as long as it wants. They tried this type of program twice before, limited versions, with only lackluster results. But the fed says the economy needs a longer boost. It isn't growing fast enough to make significant progress, reducing the unemployment rate. The weak job market should concern every american. Reporter: So, we've seen similar types of programs from the fed before. Why will this one be different? The key aspect of the program is that it's unlimited. The fed is not going to let its foot off the gas pedal until it is confident that it seems improvement in the labor market. Reporter: Think of your car. By pumping more money into the tank, the stock market and your 401(k) GROW. You're worth more. Interest rates will also remain near zero f at least another three years, so more americans may be inclined to buy homes. But there are warnings, too. Low interest rates mean little to no growth in savings accounts. Something millions of americans, especially the elderly, depend on. Still, the fed says the bigger picture is this. More spending means businesses can hire more workers. But we were talking about that other concern, bianna. Reporter: Inflation. The fed says they don't expect any inflation over the next two to three years at least. Okay, bianna golodryga

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