The Federal Reserve announced Wednesday a modest increase in its efforts to reduce borrowing costs for businesses and consumers by extending its existing “Operation Twist” asset-purchase program through the end of the year.
The decision reflects growing concern that the economy once again is stumbling into the summer months after the false promise of a relatively strong winter. The Fed now expects the unemployment rate to fall no lower than 8 percent this year, and inflation to rise no higher than 1.7 percent, both signs of an ailing economy.
Fed officials also have indicated a desire to insure against a pair of looming risks, that events in Europe will freeze global financial markets and that the political stalemate in Washington over fiscal policy will undermine the domestic recovery.