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A bolder step would be to restart programs undertaken during the financial crisis that involved large-scale purchasing of mortgage-backed securities and government debt. But it could spook investors about the health of the economy. And a sell-off on Wall Street could prompt businesses and consumers to retreat further. In 2009 and early 2010, the Fed bought $1.25 trillion in mortgage securities, $175 billion in mortgage debt from Fannie Mae and Freddie Mac, and $300 billion in government debt as part of two crisis-era programs. At Tuesday's meeting, the Fed is all but certain to leave its key bank lending rate between zero and 0.25 percent, where it has been since December 2008. There's a chance the Fed could build on its pledge to hold this rate at record lows for an "extended period." That means rates on certain credit cards, home equity loans, some adjustable rate mortgages and other consumer loans will stay low. Commercial banks' prime lending rate would stay at about 3.25 percent, the lowest point in decades. The Fed's focus again on energizing the recovery is a shift from earlier this year, when it was starting to lay out its "exit strategy" for eventually boosting interest rates.
[Associated
Press;
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