英语文摘：U.S. Fed's new relaxed monetary policy triggers controversy

WASHINGTON, Nov. 3 (Xinhua) -- U.S. Federal Reserve announced Wednesday it will buy 600 billion dollars more in Treasury bonds, known as the "Quantitative Easing" (QE2) monetary policy to boost the sluggish economic growth. This move has been drawing wide concerns and criticism.

REASONS FOR THE POLICY

"The pace of recovery in output and employment continues to be slow," the Fed said in a statement after a policymaking panel meeting Wednesday.

Federal Open Market Committee (FOMC), the interest rate policy making body of the central bank said that it will "purchase a further 600 billion dollars of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about 75 billion dollars per month."

"Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak," the Fed said.

It noted that employers remain reluctant to add to payrolls and housing starts continue to be depressed. Longer-term inflation expectations have remained stable, but measures of underlying inflation have trended lower in recent quarters.

Bernanke and his supporters argue that the Fed is failing in both fronts of its dual mandate: sustainable levels of unemployment and inflation.

Latest data showed that core consumer price index, the key figure to measure inflation, grew only 0.8 percent in September on a yearly base. It was lower than the Fed's comfortable level of inflation ranging from 1.5 percent to 2.0 percent.

In fact, the Fed expressed its concern about deflation in recent documents.

On the unemployment front, with 14.8 million Americans unemployed and unemployment rate hovering at double digit, the Fed has been facing criticism.

The Fed said that to expand its holding of government securities is "to promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate."

Statement released on Wednesday also showed that The Fed decided to maintain the target range for the federal funds rate at historic low level of zero to 0.25 percent to boost the economic recovery.