The Federal Reserve announced today that it will initiate a second round of quantitative easing, a monetary policy designed to stimulate the U.S. economy. The central bank plans to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, at a pace of about $75 billion per month.

This action is intended to further lower long-term interest rates, encouraging borrowing and investment. The Fed’s decision reflects concerns about the slow pace of economic recovery and persistently high unemployment.

Key details of the program include:

• Total Purchases: $600 billion in long-term Treasury securities.
• Timeline: Purchases will be completed by the end of June 2011.
• Monthly Pace: Approximately $75 billion per month.
• Reinvestment: The Fed will also continue to reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities.

The Federal Open Market Committee (FOMC) stated that it will regularly review the pace of its securities purchases and adjust the program as needed to best foster maximum employment and price stability.

This new round of quantitative easing, often referred to as QE2, has generated considerable debate among economists and policymakers. Supporters argue that it is necessary to prevent deflation and boost economic growth, while critics express concerns about potential inflationary risks and the possibility of distorting financial markets.

The Fed’s decision comes after months of deliberation and signals a renewed commitment to using all available tools to support the economic recovery.