Fed keeps hammer down on mortgage rates

Mortgage-backed securities purchases could reach $1.25 trillion

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.