Federal Reserve announces stimulus plan, oil falls, dollar strengthens

The US Federal Reserve unveiled a stimulus plan seeking to lower lending rates and spur economic growth with a US$400 bln program to sell short-term Treasury bills and buy long-term debt . However, analysts feel the paln falls short of 2010’s US$600 bln bond-buying program that ended this year. Most of the Fed's lending rates are already near zero per cent, blunting the possible benefits of the measure. Significant downside risks are envisioned to the Fed's economic forecasts, amid a weak labor market and high unemployment rate. As a result, the dollar strengthened and oil fell by a dollar on the Nymex. Plunging global equities also weighed on oil prices as did a move by investors towards the safe-haven US dollar. Light, sweet crude for November delivery fell to US$85.9 on the Nymex, while Brent crude on the ICE Futures Europe exchange dipped to US$110.3.
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