WASHINGTON (September 13, 2012)--The Federal Reserve said Thursday it will spend $40 billion a month to purchase mortgaged-back securities because the economy is too weak to reduce high unemployment and said it will keep buying the securities until the job market shows substantial improvement. The Fed also extended a plan to keep short-term interest rates at record-low levels through mid-2015. The steps were announced after the Fed's two-day policy meeting. The bond purchases are intended to lower long-term interest rates to spur borrowing and spending. The Fed has bought $2 trillion in Treasury bonds and mortgage-backed securities since the 2008 financial crisis. Skeptics caution that further bond buying might provide little benefit. Rates are already near record lows and critics also warn that more bond purchases raise the risk of higher inflation later.

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