From FoxBusiness.com…

The Federal Reserve’s policy committee on Wednesday said that the Fed would buy more than $1 trillion in assets to revive credit markets, also leaving its target interest-rate range of 0% to 0.25% unchanged and signaling that the economy still has a long way to go before it recovers.

The Federal Open Market Committee said it would buy up to $300 billion in longer-term Treasuries over the next six months, up to an additional $750 billion in agency mortgage-backed securities (bringing the total this year to $1.25 trillion) and up to an additional $100 billion in agency debt (bringing the total up to $200 billion).

“The purchase of the securities will likely drive rates down for a variety of consumer debt instruments,” said FOX Business Senior Economist Mark Lieberman.

“It’s going to be helpful to the consumer. Most people were expecting them to keep [this kind of action] on the table, but not announce the magnitude and specifics of a program to be implemented so quickly,” said Maryann Hurley, vice president at D.A. Davidson. “This is quite a positive move. You’re talking about more than a trillion dollars worth of purchases over a six-month period”

The purchases are a widely rumored but fairly unusual move from the Fed, showing that it’s continuing to take drastic action to revive the economy. This move focuses in particular on the credit markets, where lending activity still seems to be somewhat frozen.

Stocks and gold spiked higher on the announcement, because the action is likely to stoke inflation; the dollar fell, because pumping money into the system makes each dollar less valuable.

Still, some market watchers were saying that the euphoria in the wake of the announcement might not last long.

“The markets love it, but I’m personally scared as the Fed still doesn’t understand that it’s not the cost of money that is the problem and they keep getting themselves deeper and deeper into this,” said Peter Boockvar of Miller Tabak in a research note. “I shudder at the thought of the unwind of all of this.”

“While I think that this is probably needed, it definitely does indicate the Fed’s concern with the state of the economy, which is really pretty bleak,” Hurley said.

In a separate statement, the Fed said it “will concentrate purchases in the 2- to 10-year sector of the nominal Treasury curve, although purchases will occur across the nominal Treasury and TIPS yield curves.”

The Fed’s policy statement showed continued deep concern about the economy.

“The economy continues to contract. Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending,” the statement said.

On an optimistic note, the Fed said it “anticipates that policy actions to stabilize financial markets and institutions, together with fiscal and monetary stimulus, will contribute to a gradual resumption of sustainable economic growth.” However, it didn’t provide a time frame by which that would occur.

The Fed noted that it sees “some risk that inflation could persist for a time.”

The Fed decision was unanimous.

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