The US Federal Reserve has said it would pump an additional $1 trillion into the US economy to try to pull it out of a deep recession, partly by buying longer-term government debt for the first time in more than 40 years.
In a statement at the end of a regular two-day policy meeting, the central bank's panel said it would buy up to $300bn in longer-term Treasuries.
The decision caught many off guard.
While the Fed has said it was considering such a move, it had seemed to be backing away from it recent weeks.
As recently as 6 March, New York Fed President William Dudley had said such a move would not be the most efficient way to ease market conditions.
The surprise announcement jolted markets.
US stocks shot higher and yields on US government bonds took their biggest one-day tumbled since 1987, while the dollar plunged to a two-month low against the euro.
In addition to purchasing Treasury debt, the Fed said it would expand by $850bn to $1.45 trillion an existing program to buy debt and securities issued by mortgage finance agencies.
The expansion of the program, which already had lowered mortgage rates, immediately pushed borrowing costs down further.
In addition to ramping up its efforts to pump money into the recession-struck economy, the Fed unanimously decided to hold its target for overnight interest rates in a zero to 0.25% percent range - the level reached in December.
One Fed official, Richmond Federal Reserve Bank President Jeffrey Lacker, returned to the fold after dissenting in January.
The Fed said rates would stay low for ‘an extended period’, a more explicit vow to stay on hold with rates for a prolonged time than it had offered in recent months.
