Fed Plans to Buy Up Long-Term U.S. Government Debt - Financials * US * News * Story - CNBC.com The U.S. Federal Reserve on Wednesday, in a surprise move, said it will buy up to $300 billion worth of longer-term U.S. government debt over the next six months and expand purchases of mortgage-related debt to help ease credit market conditions. CNBC.comIn a statement at the end of a two-day meeting, the central bank's policy panel also said it had decided to hold its target for overnight interest rates in a zero to 0.25 percent range —the level reached in December. It said rates would stay low for "an extended period," a more explicit vow to stay on hold for a prolonged time. "In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability," the Fed said. Prices for U.S. government bonds shot higher and U.S. stocks jumped on the move, with the blue chip Dow Jones industrial average moving into positive territory. The dollar fell sharply. "This is a pretty dramatic move ... They are trying to bring down all consumer rates," said James Caron, head of global rates research at Morgan Stanley in New York. In addition to the purchases of U.S. Treasury debt, the Fed said it would expand an already existing program to buy debt and securities issued by the government-backed mortgage finance agencies. It said it would expand those purchases by a combined $850 billion to a total of $1.45 trillion this year.