DXY takes a punch : The Federal Reserve said it will buy $300 billion in Treasury

By Craig Torres

     March 18 (Bloomberg) -- The Federal Reserve said it will buy $300 billion in Treasury securities and increase its purchases of mortgage and agency debt in an effort to bolster

housing and hasten the end of the recession.

     “To provide greater support to mortgage lending and housing markets, the committee decided today to increase the size of the Federal Reserve’s balance sheet further by

purchasing up to an additional $750 billion of agency mortgage- backed securities,” the Federal Open Market Committee said in a statement in Washington today. “Moreover, to help improve conditions in private credit markets, the committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months.”

     Chairman Ben S. Bernanke is becoming more aggressive after unemployment climbed to 8.1 percent and economists forecast the economy will shrink through the middle of the year. Fed officials also kept the benchmark interest rate at between zero and 0.25 percent. The central bank also said it will consider expanding the Term Asset-Backed Securities Loan Facility to

include “other financial assets,” the statement said.

     The Fed added that it will “increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Federal Reserve Chairman Ben S. Bernanke is trying to

prevent the credit contraction from deepening what already may be the worst recession in 60 years. The U.S. jobless rate jumpe to the highest level in more than a quarter century last month. Industrial production fell 1.4 percent, the fourth consecutive decline, while factory capacity in use slumped to 70.9 percent, matching the lowest level on record.