Fed bond plan won't do much to boost economy

[notesdev]

SEOUL, South Korea (AP) -- Former Federal Reserve Chairman Paul Volcker says the U.S. central bank's plan to buy hundreds of billions of dollars in government bonds probably won't do much to boost the economic recovery.

The Fed announced Wednesday that it would purchase $600 billion in Treasurys, aiming to lower long-term interest rates in an effort to spur spending and ultimately lower the U.S. unemployment rate, currently at 9.6 percent. The move comes on the heels of previous purchases of $1.7 trillion in mortgage and Treasury bonds.

Volcker told a business audience in Seoul that the Fed's bond plan is obviously an attempt to spur the U.S. economy but "is not the kind of action that's likely to change the general picture that I've described as slow and labored recovery over a period of time."

The Fed's move has caused worries in South Korea and other emerging markets in Asia. Those governments fear that lower interest rates in the U.S. will further push investors to seek higher returns overseas and that this tide of money will drive up their currencies and destabilize their markets.

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http://finance.yahoo.com/news/Volcker-Fed-bond-plan-wont-do-apf-2476058725.html?x=0&sec=topStories&pos=1&asset=&ccode=

[Kolesar]

1. I knew that...eom

[Better Today]

2. Nope, just more "help" for those poor strugglin' banks.