Note: This story was updated at 4:50pm and clarifies $1.15 trillion total figure.
The Federal Reserve has announced it will plough an extra $1.15 trillion (£820 billion) into the American economy with the purchase of more debt to help strengthen markets.
Since the Federal Open Market Committee’s last meeting in January, economic indicators have worsened. Job losses, declining equity and housing wealth, and tighter credit conditions are hitting consumer sentiment and spending, according to the committee.
To counter the slowdown, the Fed will spend $750 billion on mortgage-backed securities, taking the total amount it has spent on these securities so far to $1.25 trillion.
It will also double its spending on debt from agencies including Fannie Mae and Freddie Mac to $200 billion, and has committed to buying $300 billion more of Treasury securities over the next six months.
The Fed launched the Term Asset-Backed Securities Loan Facility to make credit more freely available to households and small businesses, and it plans to expand this to include other financial assets, it says.
Although the economic outlook remains weak in the short term, these policy actions should gradually enable growth to resume, the committee says.