Fed takes small step to bolster recovery

http://www.washingtonpost.com/wp-dyn/content/article/2010/08/10/AR2010081001386.html?hpid=topnews

More worried about the recovery, the Federal Reserve took a small step Tuesday to bolster the economy.

Wrapping up a one-day meeting, the Fed said it will use money from its investments in mortgage securities to buy government debt on a small scale. That could help nudge down long-term rates on mortgages and corporate debt, but wouldn't have a dramatic impact on stimulating economic growth, economists say.

Perhaps more importantly, the largely symbolic action sends a signal that the Fed sees the recovery weakening and that it stands ready to take more aggressive action, if needed, to keep it on track.

Delivering a more downbeat assessment, the Fed now believes economic growth will be "more modest" than it had anticipated at its late June meeting.

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