Federal Reserve takes a US$3 trillion gamble to spur lending

FEDERAL Reserve officials are throwing everything they have into the fight to stabilise financial markets and restore economic growth. In the process, the Fed balance sheet is ballooning to US$3 trillion, if not more.

It’s a risky approach because all the cash piling up in the banking system might spark rising inflation down the road. The alternative – just relying on traditional interest-rate cuts – might leave markets and the economy mired in the mud for years.