Fed announces new bid to jolt economy

As expected, the Federal Reserve has announced a new program designed to prod the faltering economy into life.

The central bank will buy $400 billion worth of longer-term Treasury bills by the end of June 2012, and will sell an equal amount of shorter-term bills. The goal is to encourage borrowing by pushing down longer-term interest rates.

The Fed said in a statement, released at the conclusion of a meeting of policy-makers, that it acted because it expects joblessness to stay high for some time. "The Committee continues to expect some pickup in the pace of recovery over coming quarters but anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate," the statement said.

The Fed's "dual mandate" requires it to focus both on controlling inflation and maintaining full employment.

In an unusual development, three of the 10 members of the Fed's policy-making board opposed the action. Seven members, including chair Ben Bernanke, supported it. The Fed usually prefers to act with unanimity.