In a bid to keep mortgage rates low, the Federal Reserve said Thursday it will boost purchases of mortgage-backed securities this year to as much as $1.25 trillion this year — a $750 billion increase from a previous committment.

The move is part of a $1.05 trillion expansion of the Fed’s balance sheet that’s intended to encourage borrowing and revive the economy. Having effectively slashed short term interest rates to zero, the Federal Open Market Committee is resorting to other means to stimulate growth.

In a bid to keep mortgage rates low, the Federal Reserve said Wednesday it will boost purchases of mortgage-backed securities this year to as much as $1.25 trillion — a $750 billion increase from a previous commitment.

The move is part of a $1.15 trillion expansion of the Fed’s balance sheet that’s intended to encourage borrowing and revive the economy. Having effectively slashed short-term interest rates to zero, the Federal Open Market Committee is resorting to other means to stimulate growth.

In addition to stepping up purchases of mortgage-backed securities, the Fed said it would purchase up to $300 billion in long-term Treasury securities over the next six months, and doubled a previous commitment to buy $100 billion in debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks.

The move should give would-be homebuyers and those seeking to refinance confidence that mortgage interest rates will stay low for months to come. So far, the Fed has used up only $217 billion of a $600 billion program launched last fall to drive down mortgage interest rates.

In November, the Fed kicked off the program with a promise to buy up to $100 billion in debt from Fannie Mae, Freddie Mac and the Federal Home Loan Banks, and $500 billion in mortgage-backed securities backed by Fannie Mae, Freddie Mac and Ginnie Mae. The program has been widely credited with bringing down interest rates on conventional, conforming mortgages to historic lows of around 5 percent.

Some economists worry that the Fed’s growing obligations, along with other government spending and tax cuts intended to jump-start the economy, will spur inflation. The committee, which sets monetary policy, issued a statement saying the near-term outlook for the economy is "weak," and that members expect inflation to "remain subdued."

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